There were two developments from Europe on Friday. One was the continued lack of progress on Greek debt swap, exactly the same situation as we had one week ago, in spite of assurances of “imminent” agreement. The other one came courtesy of Fitch Rating Agency. The company cut the credit ratings of five Euro zone nations Belgium, Cyprus, Italy, Slovenia and Spain, while affirming Ireland’s standing. Fitch downgraded Italy to A minus from A+, while Spain was cut to A from AA-, both nations by two notches. Belgium was cut to AA from AA+, Cyprus was downgraded to BBB- from BBB and Slovenia was lowered to A from AA-. Ireland’s BBB+ rating was affirmed. Markets took it in stride, disregarding the news. It seems that nobody cares and oerhaps only a downgrade of Germany will have an effect. Instead of losing ground, the Euro gained following the downgrade, with the EUR-USD closing the week on strong note above the 1.32 level. Most of other currencies followed it at the expense of the US Dollar.

In a typical fashion for Friday, I looked at trading short-term price swings at the start of the London session. The EUR-USD formed a price range in hours leading to European opening, with well-defined support and resistance. Eventually, there was a bullish breakout, which filled a buy order at 1.3120. My objective of 30 pips was met fast, on a nice follow-up by the price.

Another trade involving the Euro was in the EUR-CAD, which I discussed it at the start of this week. It took a while, but the price finally started to move in the desired direction. Friday brought a nice acceleration on Friday, closing at 1.3240. I got out at the end of the day with 85 pips gains. Even though the trend still has some room to go, there are often reversals at the start of the week, so I simply want to avoid it. Other trades covered in the last few days are still valid, at least for now. Have a great weekend!

Mike K.