EUR/USD is finding buyers on dips to the 1.3000 level with speculators comfortable to lean against the notion of continued central bank reserve diversification on weakness. Several large banks have put out fresh buy recommendation in recent days, a few of them specifically citing the reserve diversification as a catalyst for fresh longs.
Given that speculative flows can overwhelm the sovereign flows, if EUR/USD is unable to rally in fairly short order, the risks of a more significant move to the downside swell. Lower oil prices are helping the greenback this morning as they cut the US current account deficit and trim the need for USD sales by oil producers. Offers are eyed to the 1.3025/30 area near-term.
Just hitting the tape now is a 16% rise in German new car registrations in December, the first sign of German consumers trying to beat the 3% VAT hike that came into effect last week.
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