The bad news for Europe just keeps on piling up and the trading pattern of the euro accurately reflects that sentiment. Since the beginning of July, the euro has gone from a high of around 1.27 all the way down to its current lows hovering above 1.21. In the overnight session, Moody’s revised its outlook on Germany, Luxembourg, and the Netherlands from stable to negative. Moody’s noted that the outlook had changed due to the “increased likelihood of an exit by Greece from the single currency and the need for greater financial support for struggling eurozone countries from the stronger members of the bloc”. Greece’s Prime Minister even came out saying that his country is in a “Great Depression” similar to the American one in the 1930s. Moreover, Spanish 10 year yields have jumped up yet again to trade over 7.56% which reflects the market’s understanding of the risk associated with buying into the Iberian country’s debt.
With the USD gaining steadily against the euro since the beginning of February, the precious metals seem to be getting fully exhausted in their attempts to stem the selling pressure. All four are nearing major support levels and a euro short squeeze may be the only short term relief before the market returns in force in September. A three point trendline for gold has initial support at $1,560 while more significant bids will materialize ahead of $1,525. Silver finds support at $26.50 while palladium has it at $550. Platinum has now approached the $1,380 area five times in the last three months and this should be a level market participants closely watch in the near term.