Forex: EUR/USD resilient to break range bottom; catalyst on latest Spain PM comments?

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Forex: EUR/USD resilient to break range bottom; catalyst on latest Spain PM comments?

FITITOL--> FXstreet.com (Barcelona) - It did not matter the cascade of negative news coming out of Greece over the weekend - chatter increasing an exit from the EZ may be imminent - nor made much difference the victory of Mr. Hollande in the French election - which anticipates growing frictions between the Franco-German front over austerity -, EUR/USD sellers seem to be still hesitant on picking the right timing to unite forces and break through the 1.2950/1.3000 barrier.

Amid the collection of discouraging headlines, what may then provoke the Euro from finally giving up its resilience above mentioned level and continue its slide? Is the lack of clarity from further rounds of QE3 by the Fed limiting the number of committed EUR/USD bears at present time? Is the race from European banks to deleverage their balance sheets and offload some of their asset portfolios in non-core capital-intensive businesses, thus repatriating Euros back home, still underpinning the exchange rate?

Wel l, additional headwinds may be just around the corner. The next new threat adding to the large net of spooky news and potentially sparkle a sharp selloff in the exchange rate could come courtesy of Spain's banking system, which appears to being in technical collapse, according to the Spanish Prime Minister Rajoy. Surprisingly, the news have barely caused any downtick in the Euro, go figure!

“Today, the Treasury is practically the only one that finances itself on the markets,” Rajoy said in the Senate. The problem isn’t “theoretical” as it’s “happening to the immense majority of regions, our whole financial sector and most big companies.” The inability to access credit is cataclysmic for an economy.

As read in Bloomberg: "Prime Minister Mariano Rajoy said the debt agency is the only borrower left in Spain that can finance itself on markets as banks, companies and regional administrations have been shut out."

Adam Button, Analyst at Forexlive comments: "Economists expect a 1.5% contraction in Spain in 2012 but it will be several times that magnitude if credit markets stay frozen. Companies use short-term funding to stock inventories and pay wages â€" unemployment could rise to in a flash 30% from an already-staggering 24%."

"Greek politicians will continue to babble and squawk but for now but it’s just noise. Spain is on the precipice of a Lehman-like abyss" Mr. Button adds.