Royalmaxbrokers: Fourth Victim of the Eurocrisis

According to RoyalMaxBrokers, one of the main results of the weekend can be considered that Spain still became the fourth country in the euro area (after Greece, Ireland and Portugal), which applied for external financial assistance. The amount needed to recapitalize the banking system is 100 billion euros. The market reaction to the news received on Saturday was quite volatile: trading in the currency market opened with a sharp jump up the quotations of the pair EUR / USD, which tried to overcome the key resistance 1.2625 (1.2670 day high).

However, according to RoyalMaxBrokers , very soon market participants overestimated the meaning of the Spanish "rescue": still such an impressive amount speaks about the difficult situation of the banking sector of the fifth largest economy in the region. In addition, immediately talked about a very shaky position of the financial system of Italy, which may be the largest victim of the debt crisis. Not surprisingly, in such conditions, the European currency fell sharply against the dollar and at today's trading is quoted below the psychological mark of 1.25. The key short-term level is the support of 1.2450.

RoyalMaxBrokers believes that the downward pressure on the euro is increasing in proportion to the growth in yields of Spanish debt securities: on the eve of the yield of 10-year bonds has risen to the maximum level since the country's entry into the currency block. The driver of such a sharp move was Fitch's decision to lower the long-term credit ratings of 18 Spanish banks, including such large organizations as Santander, BBVA, and Banco Populari. "The rating actions are primarily related to the downgrade of Spain's sovereign rating," the agency said in a statement, while Fitch analysts also note an increase in public debt, a recession in which the country's economy is located and from which, according to some forecasts, it will not be released before 2013 , As well as fears of a repetition of the "Greek scenario."

Yet, despite Fitch's actions and the turbulence of the Spanish debt market, world stock indices managed to grow on Tuesday's session. The mood of investors was supported by statements of ECB representatives, who again started talking about the need to create the notorious banking union. Favorably received were the comments of FRB President Charles Evans, who in an interview with Bloomberg expressed support for additional monetary stimulus from the central bank.

The focus of the market in the coming days will remain news from Europe. Greek history, it seems, again returns to the front pages of the leading media. Market participants speculate on the issue of parliamentary elections, which will be held on June 17 and, perhaps, will decide the fate of the country's stay in the euro area. In addition, important are the debt auctions of Italian bills (13:00) and German 10-year bonds.