Carles Puigdemont, the leader of Catalonia, did not declare independence for the breakaway region in a speech on Tuesday despite having previously said that separation would happen in 48 hours after the independence referendum. Instead he said the results of the vote are "suspended' and that dialogue and international mediation should be explored.
Catalonia has won the right to independence as the current relationship between the province and the government in Madrid is unstainable, Mr. Puigedemont said.
The unsanctioned referendum on October 1st, which the Spanish government of Prime Minister Rajoy views as illegal, was overwhelmingly in favor of independence though the turnout was low at 42 percent.
Spanish police attempted to prevent the vote which was held in spite of the confiscation of some ballots and violent confrontations between the national forces and separatists. There has been little if any direct contact between the Catalan government and the administration of Prime Minister Rajoy since the vote.
France and Germany, the mainstays of the European Union and the euro, oppose the push for independence by Spain's wealthy northeast region which has a long history of linguistic and cultural distance from the rest of Spain.
French President Francois Macron said on Tuesday that the EU should not mediate the crisis and that the Spanish government is able to handle the conflict itself.
The unsettled nature of the dispute was evident in the limited recovery of the euro.
As the temporizing began in the news and comments out of Barcelona over the weekend and the likelihood of a declaration receded the euro gained about 50 points against the dollar rising from 1.1750.
Since the end of Mr. Puigedemont's speech, however, the currency has traded in a narrow 20 point range around 1.1810.
Nothing is settled. The euro is left vulnerable to political rhetoric, calm and otherwise, emanating from Madrid and Barcelona. That is a recipe for volatility.
Chief Market Strategist
Chart: WWM Alpha Trader