The downside growth risks could contain the market sentiment yesterday bothering the equities markets again forcing them to dive back again yesterday after having a breathe from bullish RBA statement to some extent after its decision to keep the interest rate unchanged at 4.5% supporting these markets to correct some of its previous losses of last week but today some confidence could come back to the market again believing that with the announcement about the way of the EU waited stress test, the markets are to have a clarification about the current financial situation of the banking system in EU by the end of this month as the banks have already received its questionnaire yesterday and the market is waiting to know further from the banks itself to how far they are exposed to the unsustainable debts of the struggling small countries inside the EU and outside of it to know its right needing for further funding to sustain their financial position as the market is still worrying about this position after the ECB had announced last month that the long term debt refinancing problems in Europe highlighted the need of 800 billion euros by the end of 2012 suggesting that the European banks are in need to be ready for facing bad loans following the debt crisis which can reach 123 billion euros for 2010 and 2011 to reach 105 for 2011 and for facing the bad loans from 2007 till 2009 they should be ready with 238 billion euros. So, by god's will, The markets will be waiting for any new comments from The ECB tomorrow after it's interest rate decision which is widely to be unchanged about the banking system stability in EU currently after the IMF, the EU commissions and the ECB plans of funding and buying bonds.
The single currency is trying again currently to have a place above could 1.26 after easing back again yesterday with the equities markets paring of its gains during the US session but it could find support at 1.255 today versus the greenback. Last week, the pair could get momentum with the breaking 1.2452 and now, the next expected resistance should be at 1.2685 which was the recorded previous high of last May and from it the pair fell breaking 1.2143 recording this year low at 1.1875 while the next major support should be at 1.2165 then 1.2044 and 1.1954 and 1.1875 which has become the pair main defending line before 1.16 whereas the pair has started its rally to 1.604 before falling again to 1.233 amid the credit crisis and rising back forming a lower high at 1.515 in the beginning of last December.
Walid Salah El Din