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Sudden Push Lower In EURUSD Sends Pair To Multi-Month Lows, Takes Futures With It

Tyler Durden's picture




 

The EURUSD, which has just taken on water, and moved to fresh multimonth lows, has just dropped 200 pips in under 6 hours. The pair is now threatening to drop below 1.31 after which John Taylor's target of 1.26 becomes reachable within days. It is unclear what caused the latest weakness in the pair, besides the usual understanding that Europe is in trouble, to put it mildly. More troublesome is that just like the BOJ discovered recently, the half life of interventions and bailouts is now measured in hours. And despite this implicit strenghtening in the USD, gold continues to trade close to overnight highs.

Update: 1.31 just taken out: will this level prove to be support or new resistance? Next question- what happens to the pair after not one but two POMOs.

 

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Mon, 11/29/2010 - 10:08 | 760685 SheepDog-One
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Lets just have another Black Friday...that seems to have gone so well with all the muggings, stabbings, Target store tramplings.

Mon, 11/29/2010 - 10:09 | 760687 Id fight Gandhi
Id fight Gandhi's picture

81 on the dollar index already.
Us future diving, all Europe markets down

Mon, 11/29/2010 - 10:21 | 760708 erik
erik's picture

Nov 22nd and 23rd had similar Euro action, and the stock market was down 1-2% intra-day.  we should test 1170-1175 zone today in the S&P.

Mon, 11/29/2010 - 11:17 | 760826 erik
erik's picture

this is the predictable 50 day MA bounce in SPY.  50 day is at 117.72, we bounced at 117.74.  from here until the end of the day it is a crap-shoot.

Mon, 11/29/2010 - 10:20 | 760711 Arius
Arius's picture

 

King Dolare

Mon, 11/29/2010 - 10:09 | 760688 the not so migh...
the not so mighty maximiza's picture

We need bigger bilge pumps

Mon, 11/29/2010 - 10:32 | 760697 Mr.Kowalski
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Mon, 11/29/2010 - 10:20 | 760704 Mr.Kowalski
Mr.Kowalski's picture

There is some doubt about whether the Irish Parlaiment will pass this; the PM's party was spanked in a by-election last Thurday by none other than Sinn Fein.. yes, the IRA's political arm, who has come out against the bailouts:

 

http://themeanoldinvestor.blogspot.com/2010/11/great-irish-robbery.html

Mon, 11/29/2010 - 10:23 | 760718 SheepDog-One
SheepDog-One's picture

Of course Sinn Fein has gone against the bailouts which give Irish people 100% haircut, banksters 0% haircut, and also the IRA has said theyll go back to bomb making and bank blowing up, something that gives a bit of worry to fatcat types.

Mon, 11/29/2010 - 10:31 | 760737 erik
erik's picture

If Ireland did balk at the bailout, the EU would be enraged.  It will only take one of these countries to refuse a bailout and pick the default path for the world economy to come to a screeching halt considering the massive amounts of debt held in the EU.

The problem is the same everywhere though, countries that are run for the banks and not the people.

Mon, 11/29/2010 - 10:27 | 760719 fiftybagger
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American "shiny object" ploy.  Quick, look over there......

http://i.imgur.com/1g11I.jpg

 

 

U.S. Employs Soros type hedge fund raiders to raid the bonds of various EU nations.  Said nation's interest rates rise and same raiders start floating default rumors.  Default fears rise and EU has to put out another fire.  USFEDgov and their cronies pull off another distraction to keep the world's mind off the reality of the impending collapse of the U.S. empire and everything that goes with it...

 

LEAP20/20 was on to this tactic years ago

 

Mon, 11/29/2010 - 10:24 | 760720 Id fight Gandhi
Id fight Gandhi's picture

World falling and we get double pomoed, no idea where were going. Any ideas?

Mon, 11/29/2010 - 10:56 | 760790 Larry Darrell
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I don't participate in the markets, but my guess is they will use this POMO to defend people wearing their DOW 11k hats.

Mon, 11/29/2010 - 10:24 | 760722 Turd Ferguson
Turd Ferguson's picture

And gold measured in euros is kicking ass and taking names.

Mon, 11/29/2010 - 10:28 | 760733 e_u_r_o
e_u_r_o's picture

fuck yes!

Mon, 11/29/2010 - 13:49 | 761436 tmosley
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Gold measured in dollars is holding up well too.

Ever ratcheting up as the paper currencies are forced down.

Mon, 11/29/2010 - 10:24 | 760723 Cognitive Dissonance
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I kinda expected to hear a flushing sound or something. Did the Euro really crash if there's no sound, other than the 370 Million screaming citizens of Europe?

Mon, 11/29/2010 - 10:28 | 760734 johngaltfla
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I think we see that at 1.26.Then REAL screaming from Bernanke at 1.20. That would eradicate ALL of QE2 before it is even finished to see the USDX at 86+...

Mon, 11/29/2010 - 10:33 | 760745 erik
erik's picture

At 1.20, we're likely to hear QE3 rumors or new stimulus rumors.  It'll also be likely that Spain 10 year will be yielding well above 7%.

Mon, 11/29/2010 - 14:04 | 761500 ZeroPower
ZeroPower's picture

Anything above 1.15 is too early.

Get to 1.20 first, politicians will start noticing. Hopefully, when we break below it, then the real stimuli will come out of the Eurozone... Aka leaving the Germans scratching their heads. Their unemployment level is at an all-time low for a reason - there's no work anywhere else (ex Eastern EU, but wages are too low).

Mon, 11/29/2010 - 10:32 | 760740 DeltaDawn
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Just let me know when I can afford to shop at Hermes.

Mon, 11/29/2010 - 10:46 | 760772 Cognitive Dissonance
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As long as you can find some taxpaying fool to give you credit (or guarantee your existing outstanding credit) you can always afford to shop at Hermes.

Mon, 11/29/2010 - 10:26 | 760725 BaboonAss
BaboonAss's picture

Will we see any breakers get tripped this week?

Mon, 11/29/2010 - 10:26 | 760728 NumberNone
NumberNone's picture

Love the Bloomberg Headline on the Irish bailout..."Ireland Wins $113 Billion...".  

I'm sure a lot of people are wondering why isn't there rejoicing in the streets of Ireland today?  They seemed to have just won some sort of EU Powerball...lucky bastards!

http://www.bloomberg.com/news/2010-11-28/ireland-wins-eu85-billion-aid-germany-drops-threat-on-bonds.html   

Mon, 11/29/2010 - 10:27 | 760731 goldmiddelfinger
goldmiddelfinger's picture

1.29 or bust

Mon, 11/29/2010 - 10:29 | 760735 TradingJoe
TradingJoe's picture

Oh Darn, my UUP calls will simply go apeshit!

Mon, 11/29/2010 - 11:30 | 760752 DowtingBull
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Some of the high priests of finance have been talking their book for the last few days. An early christmas cometh for some.

 

Mr "Bric-a-Brac":

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8164914/...

 

Mr "I Fink so":

http://www.telegraph.co.uk/finance/currency/8164136/BlackRocks-Larry-Fin...

Mon, 11/29/2010 - 10:41 | 760760 overmedicatedun...
overmedicatedundersexed's picture

not seeing much about wonderful black friday in the press today..hmmm

how good was it??

another item consumed by the media then into the black hole..the MSM "black hole event horizon for information"..the more important the quicker it disappears ..Japanese moving billions in bonds over boarder, poof gone,

Obama school history, gone, jimmy's tax problem gone, GM BK finances, gone..GSE

insolvent, gone..

Mon, 11/29/2010 - 11:07 | 760806 RobD
RobD's picture

I've been wondering what grade Obama got in poly-sci 101 or better yet Constitutional Law 10whatever. Also did he have any girlfriends before Michele? In my opinion the guys life has more "black holes" then any public figure in recent history. But what the heck lets elect him president during the biggest financial crisis since the great depression. What could go wrong?

Mon, 11/29/2010 - 10:42 | 760763 colonial
colonial's picture

Howdy Boyz:

All this news about the EUR/USD...what a joke.  Who didn't see this coming?  Even casual readers of ZH knew Ireland was going to need a rescue package.  One might argue the EUR/USD is reacting to the fact that other Eurozone economies are in similar trouble. 

As per a point I made here a week or so ago, The Fed also knew this day would come, which is why their clumsy QE2 was nothing more than institutional front-running. 

Just saw the scroll on CNBC where some idiot was talking about the USD now being too strong.  Unbelievable. 

The good news of the day is the USD is the best of the worst. 

Mon, 11/29/2010 - 10:44 | 760764 colonial
colonial's picture

sorry for the double post

Mon, 11/29/2010 - 10:45 | 760769 chinaguy
chinaguy's picture
The nature of the euro has fundamentally changed Written by Jamie Coleman
November 29, 2010 at 13:09 GMT

In the early days of the sovereign debt crisis, the thinking was that bailouts, if necessary, would be punitive to keep other nations from following suit.

Now, bailouts have become  institutionalized, part of the European landscape. Terms are longer and easier to manage. Pretty soon, there will be no stigma to being bailed out by the EU and IMF at all. What stigma will there be to being the fourth bailout recipient, especially if you can spread the pain of repayment over ten years (or more, quite likely,  if that becomes too onerous…)

Whatever hope the market may have had of the euro being a deutsche mark substitute was shattered over the weekend when Europe put in place a permanent bailout mechanism, rescheduled the Greek bailout package and added Ireland to the dole.

The euro will continue to exist but it will not be considered hard money in the future. It is instead every German’s nightmare…

RIP the Germanic Euro: 1999-2010.

 

BTW the author is a FX trader - CG

 

Mon, 11/29/2010 - 10:46 | 760771 Ferg .
Ferg .'s picture

Expected some sort of decent ( and short term sustained ) bounce in EUR/USD after the Irish bailout announcement yesterday , but appears that the market has given a firm one finger salute to that . Seeing how it plays out around 1.3000 should be interesting ...

Mon, 11/29/2010 - 10:55 | 760782 erik
erik's picture

this is just like May post-Greece bailout.  immediate pop, then big drop.  though the stock market isn't dropping as much this time around so far.

SPY 50 day MA will be in play here shortly at 117.72.

Mon, 11/29/2010 - 10:54 | 760785 lizzy36
lizzy36's picture

Where is Wanker this morning?

No doubt probably double fisting AAPL and AMZN, while in the fetal postion.

Mon, 11/29/2010 - 11:05 | 760799 virgilcaine
virgilcaine's picture

risk off.. risk off.. must sell.

Mon, 11/29/2010 - 11:42 | 760905 erik
erik's picture

if we manage to get one more rally here toward the ~1200 zone, the action will be very similar to the Jan and Apr tops.  i suspect with Chicago PMI, China PMI, ISM, ISM Services, nonfarm payrolls on deck the market can manage another run at 1200 this week.

if we are following the Jan and Apr script though, that'll be the final run at 1200.  we would likely slice through the 1170-1175 zone and 50 day MA on the next trip down, and find a quick destination at the 200 day MA at ~1130-1135.

Mon, 11/29/2010 - 12:52 | 761227 Silverstar
Silverstar's picture

Maybe i can bring light to the dark....what causes this move.

 

In my view... there is a buyers strike in Euro Bonds.

 

Spanish

http://www.bloomberg.com/apps/quote?ticker=GSPG2YR:IND

 

http://www.bloomberg.com/apps/quote?ticker=GSPG10YR:IND

 

and Italy

http://www.bloomberg.com/apps/quote?ticker=GBTPGR2:IND

 

http://www.bloomberg.com/apps/quote?ticker=GBTPGR10:IND

 

Maybe u find some other reasons...

 

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