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Yet another example this morning of the single currency failing to respond negatively to bad news - another sign that the quality of the price action is very different these days.
Despite Moody’s adverse pronouncement on the outlook for eurozone sovereign debt ratings, the euro has preferred to focus on other developments. Spanish and Dutch auctions went well and the German ZEW economic sentiment index for February was significantly above expectations. Indeed, the ZEW remarked that the current reading suggests that the recent slowdown is unlikely to last very long, and growth could pick up in the second half. After falling to 1.3125 early in the London session the euro has recovered and is now back above 1.32. More short-covering and sovereign wealth fund-buying are behind this most recent move.
These days, the euro seems to really struggle to sustain lower levels, which must be encouraging for the bulls.
