Euro Falls on Renewed European Banking Concerns

The Euro was under pressure most of the day following Monday’stechnical closing price reversal top and renewed European banking concernsfollowing the downgrading of BNP Paribas earlier in the week.

The Euro was under pressure most of the day following Monday’stechnical closing price reversal top and renewed European banking concernsfollowing the downgrading of BNP Paribas earlier in the week.

Traders took profits on long positions and shorts reappliedpressure following a 10 day rally which saw the single-currency rally from1.1876 to 1.2467. Investors are concerned that the Fitch downgrading of BNPParibas may only be the tip of the iceberg as several other banks may be inlineto accept a similar downgrade.

Technically the EUR USD confirmed Monday’s closing pricereversal top and is well on its way to reaching its first objective at 1.2171,followed by 1.2102. This will be a critical test for the Euro. Bullish traderswill try to build a secondary higher bottom in this retracement zone. If therecent rally was truly only short-covering then this area will be meaninglessas renewed short-selling will dominate the trade.