Euro Stabilizes Above 4-month Low After Dijsselbloem Reports | IFCM Hong Kong
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Euro Stabilizes Above 4-month Low After Dijsselbloem Reports - 26.3.2013

The Euro has been under heavy selling pressure against the greenback as the Eurogroup chef made some bearish reports. More specifically, Jeroen Dijsselbloem, said that Cyprus bail-in and bank restructuring could be used as “template” for the rest of the Eurozone, which was translated by investors that bank’s bondholders and depositors will have to take losses in other stressed peripheral countries, in particular for Italy and Spain. The latter increased short positions on the EURUSD that spiked down to new 4 month low yesterday at 1.2829, it is currently trading at 1.2876. The currency pair is at a critical point at the moment, should the selling pressure on Euro is maintained we expect next support at 1.2655.
The spread of the 10 year bond yields between Germany and major peripheral countries has widened since 15th of March, when the initial rescue plan for Cyprus was decided. Spain 10Y yields rose to 4.96%, Italian to 4.60% while Geramn 10Y yields dropped to 1.33% from 1.41% one week ago.
Elsewhere, the EURJPY was also under selling pressure sinking to 120.08 and rebounding earlier today up to 121.58. EURGBP plummeted to 0.8456 approaching 2-month lows while EURCHF lost ground but not in such extend since these two currencies are positively correlated. Kuroda at its statement earlier today reconfirmed its pursuance of bold monetary easing to achieve 2% price inflation at the earliest possible. In addition BOJ governor said “that the scale and type of assets to be purchased have not been sufficient” indicating that asset purchases will increase and possibly longer maturity assets would be included. The USDJPY jumped from 93.55 to 94.44 after Kuroda’s statement, investors are highly expecting the next BOJ meeting on April 4th.
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