FXstreet.com (Barcelona) - The EU Leader's Summit has come and gone as has the ECB meeting where rates were duly cut. "In our last edition we warned of a binary impact on the EUR that post these events would either be rallying towards 1.2830 and possibly 1.30, or break down below 1.2425 on its way to 1.1875/1.20. In the event and with spot currently at 1.2375 it is the latter- and you might be forgiven for thinking job done." said the Global Markets Research team at NAB. However, "The EUR is breaking down for reasons we had not expected, leaving us very wary of the sustainability of this move. We had warned that comments from the G20 heads of state the week before the EU summit gave hope that Europe‟s leaders were finally getting their act together. And despite market pessimism leading into the event during which EUR/USD hit a one month low of 1.2407, the summit did deliver." They noted.
EU leaders united behind the idea of breaking the vicious circle between banks and sovereigns, deciding to move towards a single supervisory mechanism for Europe‟s banks - a forerunner for a banking union. "The aim is to have this up and running by the end of the year and though the process is likely to be evolutionary rather than „Big Bang‟, any ratcheting up of the crisis can result in fast-forward policy initiatives. Indeed with Eurogroup finance ministers set to implement on 9 July what the EU Council agreed, the ECB‟s banking supervisory powers could be up and running sooner than many think." they added.