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eUrO @ 1.2683 =MiLd CoRrEcTiOn DuE – nOv 13

November 13, 2012

Euro @ 1.2683 = It all about Greece right now, as the lingering Greece funding is putting pressure on Euro that could take another week and today’s Greek T/bills auction is the cause of weakness of European currency. I think the auction size is not too big and European knows about the consequences of poor auction result. There are surly bigger issues about Greece debt reduction target (haircut) in next 8-10 years that is also causing delay in announcement. In all probability auction is micro problem in terms size of European problem that will surely be sorted out and Euro could make minor recovery, as Greece parliament on Monday passed the austerity budget that includes more than Euro 9 billion additional cut next year.
Today’s European data should provide the lead, as bad economic data could see some more dip before correcting, but a good number should give excuse to Euro correct as US Dollar’s strength is now over stretching in terms of day trading. Yes Greek T/bills auction failure will result further Euro losses, which is not a favoured scenario. But do keep a close watch on Spanish 10-year bond yield for more clues to keep a tack of Euro trend.
The fall that I was referring has occurred as I am expecting 1.2640 levels to hold, though mood of the market will remain bearish unless there is a clear direction. Euro needs to clear above 1.2780 zones and I suspect that its will find resistance around 1.2735-40 levels. So be quick to book your profit. Only break below 1.2610 risk for 1.2550

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