FXstreet.com (Barcelona) - The euro has been choppy in the European trading session today after news across the continent has dampened the optimism somewhat, that revitalized the FX markets Friday. European loans for Spain's banking sector bail-out will no longer be explicitly senior to debts owed to private sector bondholders with no explicit indication that they will rank pari passu.
Rather than being reassured then, bondholders merely now find themselves in an indeterminate state – it should now be clear that using European funds to directly recapitalize banks is a long term ambition, something Germany's Chancellor Merkel has already suggested may take "perhaps a year".
So while Friday's developments have clearly proved to be a boon for the euro, “the bearish case for the currency remains very much intact, and we reiterate our 1m and 3m targets for EUR/USD at 1.24 and 1.20 respectively.” According to Chris Walker, a research analyst at UBS.
Rather than being reassured then, bondholders merely now find themselves in an indeterminate state – it should now be clear that using European funds to directly recapitalize banks is a long term ambition, something Germany's Chancellor Merkel has already suggested may take "perhaps a year".
So while Friday's developments have clearly proved to be a boon for the euro, “the bearish case for the currency remains very much intact, and we reiterate our 1m and 3m targets for EUR/USD at 1.24 and 1.20 respectively.” According to Chris Walker, a research analyst at UBS.
