The main focus of the market was on the EU Summit today

- During the 6/28 European session, there was pessimism because as many expected, not much credible solution was offered.
- Discussions of bank union details are pushed back, till October.
- Spanish yields surged back up to 7%
- Italian auction proceeded with highest yield for 10-yr bonds since Dec. 2011.
- Italy does not sign off on a 120 bn euro growth package until short-term measures to shore up borrowing costs are agreed to.
- Merkel did eventually become more amenable toward using rest of the 440bn euro rescue fund to buy Italian and Spanish bonds in order to bring down yields from unsustainable levels.

So, once again, we are likely to get some short-term solutions out of this Summit. But we do have one more day to go. We’ll see if these measures will finally be agreed upon after the bickering negotiations.

The EUR/USD found support at 1.24 and recovered to around 1.2450 during the early Asian session. Forexlive notes stops above 1.2465.

Market likely to be tentative until the Friday meeting gets underway. Then we are likely to get more telling clues on where the markets want to go.

EUR/USD 1H chart 8:30PM EDT 6/28/2012

Commodity currencies were pressured today. AUD/USD fell briefly below parity, but has returned to around 1.0050 in early Asian session.

AUD/USD 1H chart 8:30PM EDT 6/28/2012

The JPY was a stronger gainer than the USD, as the USD/JPY slide back to this week’s low around 79.20, but has not broken below it. A break opens up the next short-term support pivot near 78.60.

USD/JPY 1H chart 8:30PM EDT 6/28/2012

Fan Yang CMT is the Chief Technical Strategist, currency trader, and the main contributor to FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

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