July 12 -7 20 months, the euro / dollar finished lower on K chart. EUR / USD on June 7 at touched 1.1875 after the rebound since the beginning up to the 1.3027. From the Japanese K Line chart can clearly be seen that the euro / dollar a head and shoulders bottom forming the shape. This can be attributed to the large number of selling before the need for a correction to promote the euro in the short covering, of course, of which there are some speculative traders to participate.
Short covering as the euro dollar exchange rate has led to a massive landslide, so expect the dollar's continued decline over days or will come to an end. Short covering in other words, once the end of the euro, the market or re-interested parties, the economy's fundamentals. By then, speculation will wait for an opportunity to flee, and the dollar bulls will be large-scale return. Although the recent weak U.S. economic data emerged, but the pace of economic recovery in the United States, or will soon in Europe.
July 20 auction of the Spanish Ministry of Finance successfully a total of 5.97 billion euros in 12 months and 18 months of treasury bonds, while the Greek government bonds Authority (PDMA) auction of 19.5 million euros (2.53 billion U.S. dollars) for the 13-week period Short-term debt. Although Spain and Greece, the successful debt auction, but it does not explain the euro area bond market, second-tier countries, tensions eased. Need to remind everyone that the reason for the short-term bonds, it is most likely involved in speculative trading comes into play. Only European countries were overweight before long-term bonds, said market confidence in the European countries rebuild.
Can be said that the recent performance of the euro is very eye-catching, even in ultra-up state, the face of bad news still remain strong. Moody's lowered its outlook for the Irish, whether sovereign ratings to Aa2, or the International Monetary Fund (IMF) and the European Union (EU) on July 18 to suspend the assessment of the financing plan for Hungary, resulting in lack of access to IMF Hungary and the EU established 25.1 billion U.S. dollars of surplus funds financing plan, only had a small impact on the euro. In fact, investors are concerned about the July 23 announcement of the European banks stress test results so that other sources of abatement. Once the bank stress testing of the negative news out there that will start the exchange rate fluctuations.
July 20 the European banking sector stress testing with some of the negative news coming one after another, the euro / dollar failed to break through the 1.3000 level of repression, once again fell to 1.2920 line. European mainstream news media quoted informed sources, the recent financial crisis the German Government took over the German HVB Real Estate Bank (Hypo Real Estate Holding AG) failed stress tests Europe's bank. This news came just as some European leaders slapped his face. Prior to the leaders of European countries have insisted that cry out banks to pass their stress test, their mood is understandable, but I think it should still be objective.
Investors are clearly seen, as the banking crisis would be to conduct stress tests. If you have passed the problem is not the test itself has fed support of European countries have nothing to do tests to play. Germany considered the more healthy in the euro area, their own banks are not fully tested by the pressure worse, not to mention other countries the bank. Dots, See, also expected more banks can not stress testing, will be a blow to the dollar.
On the stress test itself, I slightly doubt. Bear the brunt of the pressure test is whether the credibility? Earlier the European Central Bank to purchase bonds against their independence so that it undermines public trust, and this pressure will arise to test whether the credibility problem? The second is the pressure of the test itself really, as some European leaders say as strict? These questions will come under pressure when the test results are announced.
Now the whole of Europe is regarded as the stress test a straw, to keep out relevant tests on the pressure to "whitewash." Can understand the feelings of the Europeans, but the market's recognition is another matter. For the euro, if the test results worse than expected, it will usher in the invasion force short. If the test results better than expected, this good news continue to move up the digestive process. But once the end of the digestive process, the market's focus shifted to economic fundamentals in turn. At that time, the debt crisis in Europe will continue to show the effect of allowing the euro once again be challenged.
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