The French budget minister said that tougher budget rules were necessary in order to then get the ECB involved and German FinMin Schaueble was quoted on German TV as saying that the member states of the common currency would concentrate on creating their own Stability Union, which is much easier than trying to get all 27 EU countries to implement a treaty change.
These ongoing developments are encouraging EUR short covering but doubt will of course remain as to whether all of the 17 EUR member are willing or able to agree to whatever new budget controls are imposed.
I’d expect any rallies towards 1.3420 to meet with plentiful supply with Friday’s lows near 1.3210 providing initial support. Liquidity traditionally worsens after the US Thanksgiving holiday through the New Year so we can expect wider ranges to be the norm.
