The stress test assumes a 6.5% drop in GDP and 60% drop in home prices from the peak, but does not consider potential losses on government bonds, according to a oomberg report.
The required money to recapitalize the banks according to Wyman is between 51 to 62 bln euros, while Roland Berger concluded a 51.8bln euro need.
The results are within the expected 100 bln bailout fund Spain is asking for and is therefore not a negative shock.
The EUR/USD has been declining sharply today (6/21), but has stalled at 1.2550 after the results came out. A break below 1.2550 would form a double top in the EUR/USD suggesting a cap to June’s corrective rally.
Fan Yang CMT is the Chief Technical Strategist, currency trader, and the main contributor to FXTimes – provider of rex News, Analysis, Education, Videos, Charts, and other trading resources.
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