An incredible downward rally of the euro last week broke every rule of the technical analysis. At present the euro is losing its positions much more intensively than the US dollar index. Let us analyze the reasons for such an abrupt fall.
Huge euro sales were mainly driven by the shock resignation of Jurgen Stark, a key member of the European Central Bank. The official reason for this is personal. Yet, such large news agencies as Reuters and RBK have been saying that the true reason is acute disagreements between Stark and his colleagues. It is pretty obvious that the disagreements might have appeared over the issue of buying European State Bonds. Taking into consideration the current condition of the euro, it was severely affected by the resignation of one of top officials who was to stay in office until 2014.
Moreover, the euro was also pressed down by news about Greece’s default. This information was released at the end of last week. According to this data, Greece’s default was expected to happen on September 10-11. The information on Greece’s default was denied by Greece’s minister of finance.
Under the present conditions selling appears to be rational, from the fundamental point of view. As to the technical point of view, a correction rebound may well be expected. The current situation around eurozone has been creating beneficial conditions for downward trend.
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