By: DailyForex.com
The Euro still remains near to a 2-week low as more violence erupted in Spain as anti-austerity protesters loudly voice their displeasure. Later today, the Spanish prime minister will present the 2013 budget and economic reforms to the Spanish parliament. The Spanish government has been reluctant to ask for official assistance which is needed before the ECB’s sovereign bond purchase scheme can be activated; as a result, the yield on Spain’s 10-year bonds which were sold at auction yesterday rose above 6%. Moody’s credit ratings service is also expected to weigh in on Spain’s creditworthiness this week, and many analysts believe that Moody’s will slash their rating to just status which some believe may be the impetus the government could need to react.
As reported at 1:52 p.m. (JST) in Tokyo, the EUR/USD pair was trading at $1.2876 close to the 2-week trough of $1.2835 established on Wednesday. Since the September 17th high of $1.3173, the pair has dropped about 2.2%, and analysts worry that that small correction might signal a full reversal if market sentiment continues to deteriorate. Support is seen near the 200-day moving average at $1.2826; additional support is seen near $1.2740. One forex strategist in Hong Kong expects that initial support to be breached, and a test below $1.28 to occur soon.