The growth potential of the Euro is limited, although it rose to 2-week highs against the U.S. dollar and the Swiss franc, after the President of Catalonia Carlos Pujdeme announced the postponement of the introduction into action of the Declaration of independence.
Analysts recommend you to exercise caution in anticipation of retaliatory statements by the Prime Minister of Spain, Mariano Rajoy. It can be a key factor in determining the direction of the Euro, says analyst at FXTM Luqman of Otunga.
According to him, the dynamics indicates that EUR/USD “waiting for the signal to go up or down.”
The Prime Minister of Spain on Wednesday demanded that the leader of Catalonia Carles Pujdeme to clarify whether he declared the independence of the region. This was the first step towards the possible deprivation of Catalonia certain rights of autonomy and confrontation with the separatists.
Rajoy accused Pokdemon a deliberate ambiguity made Tuesday’s statement. According to him, the official demanding explanations necessary precondition for the application of article 155 of the Spanish Constitution, which allows the government to deprive the regions of certain rights of autonomy in the event of threats to the interests of Spain. Earlier this article had never been applied.
Before entering into effect of article 155, the government is obliged to officially invite the region to stop violating the law.
Rajoy’s statement was an attempt to stop that, in the opinion of the government, is a multiple violation of the law by the leaders of Catalonia. The Spanish Constitution provides for the preservation of “unbreakable unity” of the country.
At the moment EUR/USD is trading with an increase of 0.2%, 1,1835. 1,1850, a break above will open the way to 1.2000 floor. Otherwise, it may fall to 1,1680, says Otunga.
Information-analytical Department Forex club