Euro Skids

The euro bounce toward the middle of the day's range ran into a wall of selling. Rumors that Italy may see its rating cut and news that Irish Labour Party will vote against IMF/EU aid package drove the euro briefly through yesterday's lows. The former may be true, but we are not inclined to believe it. The latter is true but hardly news. The true signal is the Irish budget will pass and the EU/IMF package will be approved. The next government--maybe in March--may seek to renegotiate that terms later.

The euro has been range bound. It may take a break of $1.3150 to convincingly indicate the range has broken. Such a breakdown would re-target the $1.2970-$1.30 low from earlier this month.