The Swiss National Bank (SNB) threw a similar lifeline to Swiss exporters and tourist industry, pledging to support their currency at 1.20 Swiss Francs against the euro with “utmost determination” and to “buy foreign currency in unlimited quantities” to achieve this. [Bloomberg]
The euro jumped from 1.10 to 1.20 CHF on Tuesday and has been trading in a narrow range between 1.20 and 1.21 since then. Further speculation is inadvisable unless you have deep enough pockets to take on the SNB.
Germany’s high court threw Chancellor Merkel a lifeline, ruling that bailouts of struggling euro-countries are legal in terms of the German constitution. But they also created an obstacle to further assistance, requiring that parliament vote on any future bailout decisions. [WSJ]
The euro continues to test support at $1.40 against the greenback. Failure would signal a primary down-trend with a target of $1.30*.
* Target calculation: 1.40 – ( 1.50 – 1.40 ) = 1.30
The euro broke its medium-term trendline against the dollar at [TX] and is headed for another test of primary support at $1.40. Failure of support would offer a target of $1.30*.
* Target calculation: 1.40 – ( 1.50 – 1.40 ) = 1.30
After the ECB just announced that it had monetized a whopping E13.3 billion in the past week, nearly double expectations, and a total of E134 billion since the SMP program’s inception, the market took one quick look at just how effective this program has been, shuddered, and plunged realizing that neither ECB intervention, nor the shorting halt is doing anything at all.
“I expect a hard default definitely before March, maybe this year, and it could come with this program review,” said a senior IMF economist who is keeping close tabs on the situation. “The chances for a second program are slim.”
Failure of Greece to meet its targets, growing reluctance by some euro members to continue lending and the fact that private-sector participation in a second bailout won’t significantly alter Greece’s debt profile are the primary factors, the IMF official said.
The euro is headed for another test of support at $1.40 after respecting resistance at $1.45. The descending triangle suggests a downward breakout with a target of $1.30. Momentum crossing below zero would strengthen the signal.
* Target calculation: 1.40 – ( 1.50 – 1.40 ) = 1.30
The pound sterling is also headed for a test of support, this time at $1.60. Breach of the rising trendline warns of trend weakness; a Momentum cross below zero would again strengthen the signal. Failure of support would offer a target of $1.53*.
* Target calculation: 1.60 – ( 1.67 – 1.60 ) = 1.53
The Euro is testing resistance at $1.455 after consolidating between $1.40 and that level for the last two months. Twiggs Momentum oscillating in a tight band around zero reflects no real trend and this is likely to continue unless the Fed introduces a new round of quantitative easing.
* Target calculation: 1.45 + ( 1.45 – 1.40 ) = 1.50
The Pound is testing resistance at $1.66 against the greenback. Breakout above the 2011 high of $1.67 would signal another primary advance, but Momentum is falling and we can expect strong resistance between $1.66 and $1.70.
* Target calculation: 1.65 + ( 1.65 – 1.60 ) = 1.70
The Swiss Franc is testing support at $1.25 against the greenback. Respect of support is likely, but breakout above $1.30 is also unlikely in the short-term unless Ben Bernanke announces further quantitative easing.
