Good day forex traders.
Let us take a mid week look into the EUR/USD situation.
Earlier we noted a continued phase of consolidation for the currency pair. With the Spanish political challenge ongoing, we need to be cautious of any potential heightened volatility.
Looking at the EUR/USD hourly chart above, we noted of a spike happening hours ago. Such is a common response to political uncertainty. Sentiments are fluid and knee jerk reactions are not uncommon.
The immediate upper resistance will likely be 1.1880 as seen in the chart as a previous high.
Bloomberg reports ”
Prime Minister Mariano Rajoy will deploy the Spanish government’s most wide-ranging constitutional powers for the first time in the country’s history as he seeks to land a decisive blow on the Catalan separatist movement.
Spanish stocks and bonds dropped as Rajoy’s government said it will move forward with the process of suspending the powers of the Catalan administration after regional President Carles Puigdemont refused to shelve his claim to independence.
Spain’s government issued a statement on Thursday morning invoking Article 155 of the Constitution “to restore the legality” of the semi-autonomous region.
Rajoy is deploying his ultimate constitutional weapon in an effort to end the cycle of brinkmanship he’s been dragged into since an illegal referendum in the region on Oct. 1 which the separatists claim gives their cause legitimacy.
Puigdemont on Thursday threatened to make a unilateral declaration of independence unless the government in Madrid agrees to talks. Puigdemont’s response came to an ultimatum from Madrid to renounce his claims for secession by 10 a.m. Thursday or face the consequences.
Spain’s benchmark stock index was down 0.8 percent as of 12:54 p.m. in Madrid. The spread between the country’s 10-year government bond and similarly dated German bunds widened by 2 basis points. ”
We need to monitor closely as the crisis unfolds. Excessive turmoil may affect the Euro currency and hence it is critical to strengthen our trades with proper money management.
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