Euro Bears Clinging to Shorts Despite Spanish Bailout

June 11, 2012 7:51 AM EDT
Following an announcement this weekend that officials in Europe are going to recapitalize banks in Spain, the Euro rallied to a high of 1.2668 against the greenback. But the Euro comeback was short lived, as bears used the higher prices as an opportunity to reload shorts. Since then, the price has fallen back to 1.2541.

CurrencyShares Euro Trust (NYSE: FXE) which tracks the exchange rate of the Euro and the USD, is lower by 5 percent in the past 3 months, but has stabilized in the past 5 trading days.

Over the weekend, Euro officials announced a plan to pump billions of dollars into Spain's weakened banks. As a result, equity markets have rallied and bond yields in Spain initially ca,e down. FX traders, however, do not appear to be impressed.

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