Now that summer has come to a close and eurocrats are back from vacationing, we can trust that the Eurozone will be ripe with turmoil soon again. As we look at our quantitative setup for the EUR/USD, we're about to see if it breaks our TRADE level of support at $1.29. After that, $1.26 is the next level of support and after that...well...
Lots of news revolving around Europe's crisis, but the big issue at the moment is the new banking union proposal, which has Germany and France becoming nitpickish over timetables and terms of agreement. From Senior Analyst Matthew Hedrick:
"On a "single supervisory mechanism" of banks in the Eurozone, Germany remains reluctant to cede control of its banking sector. It wants the new regulator to concentrate only on the region's biggest banks, perhaps an estimated 20-25 banks. Specifically, Germany's public-sector banks oppose regulation citing a lower-risk business model. The Germans are setting an expectation that an agreement may not come until next year. On the other hand, the French, in line with the European Commission (EC) positioning, want all banks in the Eurozone (~6,000) to be supervised by the ECB and are signaling that an agreement can be reached over a shorter time horizon than the Germans."
We'll keep an eye on the EUR/USD as more news and events unfold this week, including the German bond sale on Wednesday and Italian bond sale on Thursday.