Spain is the main star of today's show as market participants are concerned about the North (Germany, Finland, Netherlands) position in regard to the “legacy assets” issue, that would also compromise Ireland. Over the next two days, the Spanish government will announce its budget, banking and structural decisions, but chances of a bailout request are very slim. The sovereign is also risking a credit downgrade by Moody's by the end of the week.
New Home Sales dropped by -0.3% in August to 0.373M, which turned out to be the opposite that market analysts were expecting. Reuters median forecast was pointing to a +2.2% rise from 0.374M (revised from 0.372M) to 0.380M.
While the downside phase short term remains in force as the EUR/USD trades below the cloud on the 240 minute chart for the first time since mid August, “the Elliott wave count on the daily chart is implying that we will see a deeper pullback to 1.2827/1.2700 (200 day ma), prior to a reattempt on the topside”, wrote analyst Karen Jones, starting to suspect that the market has topped at 1.3177 and the decline will extend back to the 2 month uptrend, at 1.2624.