Yesterday, the euro found some support in spot forex trading, rallying a bit against the U.S. dollar. After months of struggles, especially in the last couple of weeks as the sovereign debt situation has blown up, the euro found some support.
But speculation is beginning that someone intervened to help arrest the euro's fall on the spot forex market. Concerns about the $1.20 -- and maybe even parity -- could be prompting action to keep the euro zone from falling apart.
However, argues GFT's Kathy Lien, it may not be the European Central Bank that was responsible for an intervention on behalf of the euro. If there was an intervention, she asserts in FX360, perhaps it was the Swiss National Bank:
According to recent data detailing Switzerland’s foreign exchange
reserves, the central bank sold CHF28.7 billion, more than double the
intervention in February and March and in excess of the previous record
of CHF24 billion from last June. If the ECB were to intervene in the
currency market, they would probably not be subtle because the point is
to shock the market and not to keep them guessing.
The rally for the euro in forex trading yesterday was gradual, and more of a support -- the work of subtlety. At any rate, today a lot of the support is disappearing as news of differences in how to handle the European debt crisis emerges from euro zone member states. Additionally, concerns about the U.S. employment situation are causing risk aversion, and the euro is once again losing ground.
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