The euro (EUR) dropped sharply against the US dollar (USD) after managing to regain some previous losses. The pair is moving below 1.2800 as its trying to settle in a new lower level having digested the bail-in in Cyprus. Looking ahead, the single currency has some tough issues to overcome. The Cyprus banks may have opened but Italy's president has yet to form government as all efforts so far for a coalition have failed. Italy is one of the heavyweights when it comes to government debt, as well as Spain. These two countries will pose a serious threat to the common currency should the political deadlock has spillover effects on the economy.
The Australian dollar (AUD) is picking up gains against the US dollar (USD). The Aussie moving above 1.0420 but could move into lower lows if it does not overcome its downward trend line.
The Canadian dollar (CAD) is moving sideways against the US dollar (USD) at around 1.0160. Should no news come into play; check buying a butterfly option on the pair and gain if the price stays the same.
Weekly option volatilities for the EURUSD picked remained around 10.00 as fear in the markets subsides and option premiums are kept constant.
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