Source: ForexYard
The EUR was sent to a 6-week low versus the USD after multiple bearish events came one after another. The final straw was a weak bond auction by Germany.
After being sent lower overnight following a poor Chinese PMI survey and reports the Dexia bailout will need to be restructured the selling of the EUR increased. Disappointing European PMI surveys point to a contraction in European GDP. Both the manufacturing survey and services surveys came in below the 50 boom/bust level. Industrial new orders for the month of October collapsed by -6.4%, more than twice the drop the market was expecting.
The final straw came when Germany failed to auction all EUR 6 bn of 10-year bunds. The auction only drew EUR 3.44 bn with a yield of 1.98%. A weak bond auction from Germany highlights the transition of the European debt crisis from the periphery to the north as ultra-safe German bonds are now being influenced by the market stress.
The EUR came under pressure following the auction with the EUR/USD trading as low as 1.3370. Support is located at the October low of 1.3145. Initial resistance is found at 1.3480 followed by the November 18th high of 1.3610.
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