Will Apathy Bring the Euro Rally to a Screeching Halt?

(eToro Blog) Euro bulls will certainly have enjoyed their long-awaited rally which followed the ECB’s recently announced stimulus plan; the EUR/USD pair has gained almost 9% in its wake, and sparked a risk rally in commodities. But there is now a growing concern that the fire that the ECB lit is in danger of being snuffed out as European finance ministers apparently are not feeling the same sense of urgency that Mario Draghi and the ECB’s governing council felt was needed to quell the escalating panic.

At a meeting in Cyprus, E.U. finance ministers inferred that there was no great rush to find a resolution to these major outstanding issues: a sovereign debt bailout for Spain, a response to Greece’s request for an extension on existing bailout terms, and the appointment of a common supervisor for E.U. banks.

In defense of the E.U. finance ministers, it has been reported that Spain has yet to officially request assistance, and that the Spanish Prime Minister has been reluctant to request help even as the country’s Finance Minister had said that he wanted to ask for immediate assistance. That led to a rumor that Spain had indeed been in talks with the IMF and ECB, which was subsequently denied. One analyst believes that Spain’s leadership is waiting to see if they can obtain more favorable yields once the results of the banking stress test are released, but pointed out that that would likely be a make-or-break scenario.

As regards Greece, the extension request had initially seemed acceptable to the majority of their foreign lenders until the Austrian finance minister said that Greece would be given only weeks to meet the E.U.-imposed targets. No final decision has been made.

With regard to the appointment of a common banking supervisor, the ECB had initially been proposed by the European commission, but the German finance minister said that he had “considerable” objections to such an appointment, effectively stalling the process of selecting a supervisor which must first be installed before the E.U.’s rescue funds can be operational.

The uncertainty over the three key decisions is putting some pressure on the EUR/USD pair, which is trading currently at 1.3096, falling back from the session high of 1.3113. On OpenBook, sentiment is slightly skewed in favor of bears, by a 53% to 47% margin. OpenBook trader JealousAppu from Switzerland closed a short position that was opened just minutes earlier with a 16% gain. The trader is relatively new to OpenBook but his 92.3% stake in the Euro-Dollar has yielded a slight gain of 0.7% over the last month.

OpenBook trader craigdup from South Africa earlier opened up a pair of long positions in the EUR/USD pair which is already showing a 4.00% gain and which targets 1.32. The trader has 76 followers and 1 copier as of this writing, and has had a 17.1% stake in the EUR/USD pair over the three six months which yielded a gain of 4.0%. Over the same period, the trader’s overall portfolio which is comprised of currency pairs and commodities had realized equity of 164.1%.

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