The Eurogroup officials said on Monday that Spain does not need a bailout as of the moment, adding to uncertainties as to when the debt-stricken country would ask for financial aid. Consequently, Spanish bond yields shot back above the key 6 percent level on Tuesday after staying below the same level since September 28 as investors appear to be losing their patience on Spain. Thus, the Euro fell by 60 pips versus the US dollar in yesterday’s European trading exchanges. A similar picture is predicted in today’s trades, considering continuing worries over Spain and Greece.
Yesterday, German Chancellor Angela Merkel visited Greece for a meeting with Prime Minister Antonis Samaras, but was welcomed with protests over the austerity measures required for Greece to qualify for financial aid from the Euro Zone’s rescue fund. Samaras said that the “Greek people are bleeding” because of the austerity measure imposed by the nation’s international lenders. Merkel offered sympathy, but no clear indication of easing the burden of the Greek citizens. With Spain, the request bailout question is still hanging, and the country’s resistance is seen to trigger traders to sell the single currency.
For the Greenback, it is expected to rise as consumer confidence rose to a 71-month high to 54 points in October, as Americans are becoming more optimistic about the future because of the upcoming elections. The Dollar is also anticipated to sustain gains as investors await the US third quarter corporate earnings report, which could weigh on riskier assets and shore up demand for safer currencies. Taking into consideration all these factors, a short position for the EUR/USD pair is suggested in today’s European trades.
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