The Euro Wreaks Havoc

On June 26, 2012 by TradingDesk

The Euro continues to wreak havoc on global financial markets, with Spain’s official bailout request for its ailing banking sector – which led to a downgrade of its major banks by Moody’s – forced the common currency to its lowest level in 2 weeks, and sparking a wide-spread sell off in stock prices. While the bureaucrats continue to fiddle, global economic activity continues its slow burn, with slumping statistics continue to roll in from Asia, Europe, South America and the US.

The lag in economic activity, and surging oil production, puts global estimates of supply outpacing demand by nearly 1 million barrels each day, a situation last seen in the early 1990s. Despite the crumbling fundamentals, energy prices bounced Monday, led higher by Brent crude rallying back above $90, as fears of escalating tensions in Syria, and on the impact of the July 1st Iranian oil embargo pulled the European grade back from its lowest levels in a year and a half. Technical studies are starting to show bottoming action in both crude and product prices. If a bounce does take place from here, the first major resistance levels are around $2.70.

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