While making the normal rounds through my sources of news, part of an article written by Kathy Lien at BK Asset Management stood out to me.
""Meanwhile 2 key developments for the FX market have been lost in the shuffle. First the U.S. dollar has returned to its pre-QE3 levels against the euro. This is important as it helps to explain why currencies are beginning to consolidate after falling sharply last week – QE3 is providing a base for currencies. As we have seen in the first and second round of Quantitative Easing, flooding the markets with more dollars has not always been negative for the greenbak. This is especially true when larger forces are at play and right now, that is the market’s concern about how the situation in Spain will play out. Lost in the shuffle has been a deal for Greece. Based on the comments made by French President Hollande this morning and German Chancellor Merkel on Tuesday, Greece is getting very close to receiving its next aid payment. They are still in negotiations with the Troika but everyone is committed to unlocking the funds before the country runs out of money next month. Merkel took a special trip to Athens yesterday to show her sign of support for the nation and her commitment to keeping the country in the euro. Hollande echoed these comments this morning and spoke for Spain as well when he said both nations have a shared vision for the EU in the coming weeks that include keeping Greece in the euro. They expect to make a decision on unlocking Greek aid at the EU Summit next week. With Germany and France now behind Greece, there’s a good chance a deal will happen soon, which would remove a key uncertainty for Europe and help the EUR/USD recover.""
http://www.bkassetmanagement.com/featured/eurusd-whats-been-lost-in-the-shuffle_2858/
I think this is a possible Euro rally in the making that could occur before the Spanish bailout rumors start flying. (They are due out sometime around the October 21st elections.)
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