The EUR USD is posting a strong gain thismorning after Spainannounced that it had sold out $4.3 billion of five-year bonds.
The EUR USD is posting a strong gain this morning after Spain announcedthat it had sold out $4.3 billion of five-year bonds. The news is evidence thatappetite for government debt is still strong and that perhaps the fear of holdingEuropean sovereign debt risk may be abating.
Spainhad to pay a higher premium to complete this auction, but it was able to placeall of its allotment. This news along with the fact that bids exceeded supplyby 1.7 times was viewed as a relief for Euro investors especially since Moody’scredit rating service placed Spain’s credit rating under review for a possibledowngrade.
The ensuing short-covering rally in the Euro helped drivethe market through the last main top on the daily chart at 1.2397. The nextlevel to overtake is the swing top at 1.2467. Once this price goes then itshould be “off to the races” as a move through this level will also take out apair of downtrending Gann angles which have acted as resistance since April.
The charts indicate that upside momentum may be strongenough to trigger a huge short-covering rally. Further analysis shows that amajor 50%/61.8% price cluster at 1.2782 is the most likely major upside target.