It is too early to hit the panic button but multiple reports of euro-selling by Asian central banks this morning should be seen as notable. In the recent past they have typically been buyers on the 1.37 handle and sellers above 1.40. Should they continue to sell down here, at a minimum, we must assume we are shifting into a new, lower range.
Ireland remains firmly in the cross-hairs with spreads out another 35 bp this morning, now at 685 bp as the market prices in an eventual bailout from the EU/IMF.
We’ve dipped as low as 1.3685 so far this morning, 15-pips above yesterday’s low. I can’t prove it, but I assume there are 1.3650 and 1.3650 barriers should we continue to dip…
1.3720 is very short-term resistance. Better resistance is at 1.3765.