Euro Continues to Slip

North American participants have not been as enthusiastic as Asian and European operators. The euro has slipped lower throughout the session. News that Fitch cut BNP Paribas long-term international rating to AA- from AA (stable outlook)has seen the euro record new session lows.

France has been in the news. Bot the IMF and EC have expressed doubts about the government's economic forecasts. Reports suggest the government may cut its forecasts but only after the release of Q2 GDP figures, but Econ Min Lagarde denied the reports. The government forecasts 1.4% GDP this year and 2.5% next year. Last week, the IMF said French growth will be sluggish this year (1% ?)and pick up only slightly next year.

France aims to bring the deficit back to 3% of GDP by 2013. The deficits is currently projected to be 8% this year, 6% in 2011 and 4.6% in 2012. New savings measures are expected in late July/early August.

In terms of politics, there had been a buzz earlier this year that the IMF's Strauss-Kahn would challenge Sarkozy. However,news over the weekend was that former Prime minister Villepin launched a new center-right party to challenge Sarkozy. The two have been long time rivals.

The euro now has been successfully sold through Friday's low near $1.2354. It had earlier risen to new highs for the move. So, the break down now leave a potential key reversal pattern unfolding. A close below there would signals an immediate test on the $1.2290 and possibly as low as $1.2200.