After breaking below the 1.4030 support line, Euro/Dollar continues lower and has just pierced through the round number of 1.40, eyed by many. It is quickly approaching the next support line. There are multiple reasons:
- Weak German PMI: The initial numbers for Europe’s powerhouse were significantly weaker than expected.
- Spain’s political mess: the ruling party lost regional elections. Protests against all parties continue on the streets. Spanish bond yields are just under the all-time high of 5.60%
- Italy’s got a credit warning over the weekend. This is serious – Italy is Europe’s second largest country.
- Greek re-profiling: The Greek prime minister ruled out restructuring but not re-profiling. This game of words only delays the inevitable default.
- Oil prices are falling – this helps the US dollar.
The next support level is at 1.3950, followed by more significant support 1.3860.
For more on the Euro, see the breaking below the 1.4030 support line.