A report that the European permanent bailout fund (ESM) will be able to recapitalize banks such as Bankia is lifting the euro from the gutter.
EUR/USD jumped from 1.2430 to 1.2470. 1.25 is still looming above.
EUR USD Small Recovery – Click image to enlarge
It fell earlier to the abyss on rising yields for Spain and an awful Italian auction. Spanish yields got too close to the scary 7%. One of the reasons for Spain’s pain is the nationalization of Bankia -injecting an additional 19 billion euros for weighs on the sovereign.
Getting ESM funds is a great relief for Spain, assuming it is correct.
For more, see the EUR/USD forecast.
This move could certainly be a squeeze of shorts after the recent fall – an opportunity to cover a drop.
EUR/USD is now stabilizing around 1.2450- 1.2460.
