Euro currency gaps up on Spain Bailout Request

by Joe Oliver, Forex Trading-Pips

The euro gapped up over 100 pips on Monday morning morning after european governments agreed to provide Spain with a bailout loan. Over the weekend Spain asked for 100 billion euros ($125 billion) to rescue its banking system. Marioano Rajoy, Spains prime minister, portrayed his countries decision as a ‘victory’. Spain is the fourth member of the euro-zone economy to seek an international bailout.

Contributing to the move higher in euro and other risk assets was news out from China over the weekend which showed slower inflation and slow industrial production but with strong readings on exports and imports.

According to recent CFTC data euro shorts are running at all time highs since records began in 1999. Further gains in euro currency could lead to a short squeeze as traders unwind those positions.

EUR 60 minute bars

EUR 60 minute bars