News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
More View more
Real Time News
  • Nasdaq Ekes Out Small Gain As Focus Turns to FOMC, Uber Flies On Bullish Guidance $NDX $UBER #trading #FED
  • Fedex Q1 Results: Revenues: $22.0B vs. $21.8B est. EPS $4.37 vs. $4.92 est. $FDX down roughly 2.25% AH
  • In this week's Macro Setup @CVecchioFX, discusses with @RiskReversal and @GuyAdami, news regarding property developer Evergrande weighing down US financial markets, and September's Fed meeting impact on assets. Tune into the markets now!
  • Copper demand continues to outstrip supply, according to the recent update from the International Copper Study Group. Get your $XAG market update from @CVecchioFX here:
  • China to be carbon-neutral by 2060; country will stop building coal-powered projects abroad - BBG
  • Curious to know if this is because a) bailout by Beijing is still widely viewed as the base case scenario if contagion materializes and/or b) recent backstops implemented globally to curb financial market fallout have effectively supplanted left tail risk
  • video uploaded from today's webinar
  • WTI crude rebounded nicely from session lows, now trading at $70.50 $CL #Oil #OOTT
  • RT @ZabelinDimitri: Regarding the Fed dot plot⬇️ "If another two officials were to move up their expectations for a rate increase into 2022…
  • Tonight will see Chinese markets open after a two day closure to observe mid-Autumn festival. Naturally, there will be increased focus and volatility given the current backdrop of Evergrande default concerns. Get your market update from @JMcQueenFX here:
EURUSD Falls Back Below 1.26 as Spanish Yields Soar

EURUSD Falls Back Below 1.26 as Spanish Yields Soar

Christopher Vecchio, CFA, Senior Strategist

Fundamental Headlines

- Dollar Shortage Seen in $2 Trillion Gap – Bloomberg

- Euro Chiefs Signal Greek Austerity Softening as Summit Looms – Bloomberg

- Egypt Islamists Claim Presidency as Army Tightens Grip – Reuters

- Greece’s Conservatives Start Coalition Talks – WSJ

- Spanish Yields Surge; Greek Relief Wanes – WSJ

Asian/European Session Summary

The Greek elections yielded the somewhat surprising result of a strong New Democracy victory, with the pro-bailout party garnering enough votes to be in the position to form a coalition government with the other major pro-bailout party, PASOK. Should this materialize, it will keep the anti-bailout party Syriza on the sidelines as the main opposition, but that is only likely to last for so long. Early reports indicate that PASOK will not form a coalition government without the inclusion of Syriza, whose leader Alexis Tsipras has already stated that his party will not be joining New Democracy in a “grand coalition” of sorts.

On a bit of speculation about how this Greek drama will unfold, as a politician, Mr. Tsipras is playing his cards well, as he appears to be in the game for the long haul. That’s to say that if Syriza were to have won yesterday, it would have only been by a razor-thin margin, one that would have likely deteriorated quickly should Greece have needed another bailout under his watch (they will in about a month’s time). On the other hand, with a strong showing, Syriza is now primed to garner majority support in a few months when Greeks return to the polls (assuming New Democracy and PASOK form a government), as the center coalition won’t do anything to materially change Greece’s projected path out of the Euro-zone.

As the Greek election results have been digested, it’s now clear that G20 leaders won’t unveil the nuclear option of flooding the markets with a few hundred billion dollars of liquidity to ensure price stability in the coming days. This was much of the reason markets rallied at the tail end of last week, and without the promise of more easing, much of the gusto behind the US Dollar’s decline has been quelled. This “snap back” to reality after the election has dragged the EURUSD from its highest level in three-weeks at 1.2747 to back under 1.2600 just ahead of the US cash equity open.

Primarily, with no easing on the way, investors have dumped Spanish debt en masse, with the 10-year note yield surging today to as high as 7.285%, after opening at 6.840%. These are the highest yields the Spanish 10-year note has seen since late-April 1997. On the shorter-end of the yield curve, the Spanish 2-year note yield climbed as high as 5.592%, its highest level since late-November 2011.

Taking a look at other European credit, Italian debt is under pressure as well, with 10-year notes yielding 6.057%, at the time this report was written, after rising to 6.173% earlier in the day. The 10-year note yield topped on June 14, when it hit 6.342%. On the shorter-end of the curve, Italian 2-year notes rose by 18.9-basis points to a 4.522% yield.

EURUSD 5-min Chart: June 18, 2012

EURUSD_Falls_Back_Below_1.26_as_Spanish_Yields_Soar_body_Picture_1.png, EURUSD Falls Back Below 1.26 as Spanish Yields Soar

Charts Created using Marketscope – Prepared by Christopher Vecchio

The Australian and New Zealand Dollars lead on the day, appreciating against the US Dollar by 0.22 percent and 0.34 percent, respectively. The Canadian Dollar is the worst performer, losing 0.42 percent against the US Dollar. After appreciating by as much as 0.88 percent, the EURUSD was trading 0.31 percent lower, at the time this report was written. The USDJPY was slightly firmer, gaining 0.22 percent on Monday thus far.

24-Hour Price Action

EURUSD_Falls_Back_Below_1.26_as_Spanish_Yields_Soar_body_Picture_8.png, EURUSD Falls Back Below 1.26 as Spanish Yields SoarEURUSD_Falls_Back_Below_1.26_as_Spanish_Yields_Soar_body_Picture_2.png, EURUSD Falls Back Below 1.26 as Spanish Yields Soar

Key Levels: 13:45 GMT

EURUSD_Falls_Back_Below_1.26_as_Spanish_Yields_Soar_body_Picture_5.png, EURUSD Falls Back Below 1.26 as Spanish Yields Soar

Thus far, on Monday, the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) is trading higher, at 10096.63 at the time this report was written, after opening at 10060.99 (the index closed at 10072.32 on Friday). The index has traded mostly higher, with the high at 10111.05 and the low at 10060.88.

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, send an e-mail with subject line "Distribution List" to

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.