When speaking in London this past July, ECB President Mario Draghi stated in no uncertain terms that the and the bank were prepared to do "whatever it takes" to save the euro, adding "Believe me, it will be enough" for good measure.
Then last week Draghi revealed a unanimous decision to leave lending rates unchanged at 0.75 percent, leading the euro to spike against the dollar in the wake of the decision after a rate cut as purportedly widely discussed by the Governing Council.
The Financial Times reported over the weekend Eurozone finance ministers had drafted a proposal for tightened European Stability Mechanism benefits, requiring beneficiaries to invest alongside the ESM or provide a direct guarantee against losses. New data for December also showed Spanish bank's ECB dependence had declined by nearly 10% to 313.11b euro (from 340.84b). Gross borrowing was down to 357.29b from the August peak of 411.65b.
While all this points to improved fundamentals, Bernanke's speech this afternoon is poised to make an impact by strengthening the dollar to create further selling pressure or conversely strengthening the recent rally.
132.50 FXE Weekly Straddle
Reward: Theoretically unlimited on the upside
Downside B/E: $131.41
Upside B/E: $133.59