Surprises from Catalonia and Spain That Shocked the Euro

The euro is trading slightly lower than yesterday at around 1.1850 against the U.S. dollar.

The numbers for the U.S. durable goods orders came out this morning and fell short of the expectations.  The euro was muted. 

Overnight, the EUR/USD experienced a shock-wave selloff, which fell as low as $1.1815 amid the Catalan election news.  The news of Catalan pro-independence parties won the absolute majority in the regional parliament in Northern Spain.  The concerns are the tensions between Barcelona and Madrid could escalate.  Although the market typically does not like any type of uncertainty, the Catalan and Spain turmoil can certainly punish the euro short-term, but losses are likely to be limited unless the situation is totally out of control. 

Traders have refrained from placing any fresh bets due to the holiday lackluster trading activities.  However, the uncertainty of the political situation from Spain and Catalonia will likely cap any further advancement of the euro against other currencies.

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