EUR/USD has been on the defensive since triggering a barrier at 1.3400 overnight. The next logical area of support is at 1.3300/10, an area that provided solid resistance until succumbing last Friday. Trailing stops will cluster in the 1.3290/95 area.
News that future bailout candidates from the ESM will have to invest alongside the ESM or indemnify it against losses has cooled the rally in peripheral bonds. Spanish 10s are back to 5% and Italian 10s have risen 5 bp to 4.17%. Concerns over the US debt ceiling have risen after the US Treasury announced over the weekend that it would not employ any of the silly gimmicks like platinum coins to evade the debt ceiling. Now it is up to legislators and the executive branch, in whom the markets have little faith.
Offers are seen at 1.3370 near-term with more up at 1.3400.
