US equity markets saw steep declines yesterday, with the Nasdaq falling nearly 3% on the session. The Dow and the S&P were also both lower by more than 2% as debt contagion fears continue to plague market sentiment. Momentum carried over into Asia Pacific markets with the Hang Seng Index and S&P/ASX 200 tumbling 2.1% and 1.3% respectively. Japanese markets were closed in observance of children's day. Commodities continue to fall on renewed dollar strength, with gold lower by more than $20 from yesterday's 5-month high to $1167,and crude sitting just below $82 per-barrel.
The Battered Euro
The euro remains under considerable pressure, with single currency breaking below the 1.30 handle late in the New York session. Sovereign debt fears have all but subsided, as signs of contagion begin to materialize with yields on Portuguese, Spanish and Greek bonds rising sharply. The euro was weaker amid a choppy trading session in London, falling as low as 1.2936 before recovering to the S1 monthly pivot at 1.2990. The single currency will remain heavy with targets eyed at 1.2930, followed by the figure and our limit at the 100% Fibonacci extension taken from the Dec 18th and Nov 26th crests, at 1.2880. A breach here could lead to significant losses for the euro, with demand seen lower at the 1.28 handle. Resistance starts at 1.30 with subsequent ceilings seen at 1.3020, 1.3060 and 1.31.
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