The euro head to the upside slightly midday in an attempt to catch a breath as the 16-nation currency continues to endure heavy losses. The growing sovereign debt crisis unleashed heavy pessimism that triggered a massive sell-off yesterday and continued today. Equity indices declined heavily on the prevailing pessimism over the expanding problem that might result in a new crisis and threaten a freeze in financial markets and lack of liquidity as borrowing costs surge. Risk aversion was in favor of lower yielders or safe haven currencies and assets such as the dollar.
The euro rebounded against the dollar after touching 1.3140 supported slightly by expectations that the IMF will extend its bailout package to Greece to help end the crisis, especially as the contagion is spreading threatening mostly Portugal, Spain, Ireland and Italy that are already in red territories. The euro remains bearish so far as far as its stable below 1.3265 which will pressure it downwards to targets at 1.3125.
Sterling rebounded against the dollar from around 1.5140 support to trade around 1.5210, while the bearish favor remains valid targeting 1.5075 yet only if the pair remains steady below 1.5245. Momentum indicators are saturated with selling pressures which signals upside movement to gather more bearish momentum. The trading range for today is expected among 1.5075 support and 1.5270 resistance.
The USDJPY pair succeeded in breaching the resistance at 93.45 which increases the likelihood for the pair to continue to the upside as far as its stable above the aforesaid level. Targets are expected at 94.00 and 94.80; nonetheless breaching 92.25 support fails the upside expectations.