EUR/USD retested the base of the range around 1.2520 a short-while ago despite a continued slide in Spanish yields.
Spanish 10s are down to 6.34%, nearly 100 bp lower than the 7.31% spike high on Monday.
Be careful about selling weakness ahead of the weekend with the market pricing -in EFSF buying of Spanish and Italian debt in the wake of next week’s EU summit.












in terms of spreads, watch the 4.60/4.70 area over bunds. A break of support could see a sharp contraction in the spread, a euro-bullish factor.