Into the new week and the US holiday for Marin Luther King Day is expected to keep action tight into the latter portion of the day. However, as one dealer so succinctly put it "this could put a little added spice into the European close". If volatility is to increase then the current range extremities will be pressured and model and algorithmic accounts will be at the forefront of action given the intraday conditions.
Euro Zone industrial data disappointed weighed on the Euro but the EUR/USD appreciation has already choked on the decent sized offers into 1.2955. Offers back from 1.2940 were absorbed in the early European rally but the emergence of a quality name on the offer, and in good size, helped fill the orders pushing spot higher. As a result, until this level is broken we would suggest there is risk of a return to the 1.2900/10 area.
Elsewhere, 1.2950 expiries are noted. On the downside, the 1.2868 low from Friday and the reported 1.2850 option barriers will come into view should the Dollar strengthen further but 1.3000 looks a more interesting dynamic target.
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