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EUR/CHF falling apart as funding stress returning to EZ

FXstreet.com (Athens) – The EUR/CHF collapses after poor Italian bond auction; the pair hit the lowest level since late June.

EUR/CHF tumbles after a poorly-received Italian bond auction; EZ funding stress reemerging

The EUR/CHF was heavily wounded by the very weak Italian bond auction as the third largest country across the Euro land paid the highest yield since June to borrow over 10-years at an auction of 6 billion euro of bonds. Elaborating on, Italian bond yields rose to 4.5% at 10-years auction versus 4.46% in August. What’s more, the bid-to-cover ratio fell to 1.38 versus 1.52 prior, showing ebbing demand mostly due to the fact that we are amidst a high political uncertainty in Italy surrounding former Prime Minister Berlusconi’s fate (and to a major extent on behalf of his “Forza Italia” party threats to withdraw from current government).


Technical Outlook and Strategic Bias on EUR/CHF

The EUR/CHF is trading well under its 200-EMA (1,2287) and a clear daily close below that level, would put the pair “under pressure” further. Karen Jones, Head Technical Analyst at Commerzbank suggests that “the EUR/CHF is trading below its 200 day moving average at 1.2305 and is under pressure. Failure here introduces potential to test the 1.2250 2013 uptrend. This is expected to hold the downside and prompt recovery. Note the 55 week ma is also located here at 1.2245

GBP/USD back above 1.6100

After being rejected from the 1.6130 zone, GBP/USD came under pressure and retraced intraday gains, although the downward correction was contained by the 10-hour SMA at the 1.6060 area.
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