The narrowing wedge formation in the EUR/USD will need to be resolved at some point. EUR/USD saw little movement from the Italian auction. The EUR has upside potential with a move above 1.3094 and a break of 1.3051 would likely extend its decline.
Following last week's ECB three-year loan operation, an article in the FT noted that the continued use of the central bank's deposit facility could be an indication that banks have yet to use most of the borrowed funds from the central bank and are instead putting the funds into the ECB's deposit facility. Ahead of the ECB operation there were hopes that banks would use the funds borrowed from the central bank to purchase higher yielding sovereign debt.
David Wienke runs Triquetra Resources Ltd. in Riverside, Ill. (www.triquetraresources.com).
