Euro crumbles on Spanish bank woes and month end re balancing

EUR/USD
Range: 1.2457-1.2505
Support: 1.2450
Resistance: 1.2630

The Euro broke through reported barriers at 1.2490 yesterday trading to a low of 1.2457 following the announcement that ratings agency Egan-Jones had downgraded Spain from BB- to B after the ECB rejected a plan by Spain to recapitalise Bankia by tapping ECB cash using governments bonds as collateral. The rejection left the Bank of Spain governor Miguel Ordone with no other option to resign his post. This morning will see the results of the Italian auction around 10.10am but with equities having a dismal month I believe USD buying will continue as re-balancing steps up a gear as we approach the month end.

GBP/USD
Range: 1.5607 – 1.5637
Support: 1.5580
Resistance: 1.5780

Sterling still trades lethargically compared to its European neighbour with very little good news around to inspire risk. UK mortgage approvals and consumer credit data are released today at 9.30am with 50.1 and 0.2 expected respectively. EUR/GBP now trades comfortably below 0.8000 with 0.7950 seen as the next initial support.
AUD/USD
Range: 0.9775-0.9842
Support: 97.20
Resistance: 98.80

Data released in Australia overnight added to the weak risk sentiment with retail sales coming in weaker at -0.2 with the consensus being for a rise 0.2% after a robust reading in March of 1.1% although today’s data did show some good news with construction data showing signs of strength. The market positioning is short the lifestyle currency with rate cuts very much on the agenda from the RBA so if there are any signs of a risk rally before the US jobs report on Friday then the AUD could see a major squeeze higher.