EUR/USD opens the North American session in consolidation mode after rallying into the low 1.2990s following a very strong ZEW survey. The 10-day moving average at 1.2994 managed to arrest the rally before began to consolidate. Empire State Manufacturing data from the New York Fed is the only data of note this morning.
In the big picture, EUR/USD looks to have put in a medium-term bottom and an extended period of sideways action looks at hand. The US economy is rebounding nicely after a soft patch and the Eurozone economy continues to grow at a relatively strong pace. US deficits are shrinking and interest rates are rising, two factors that were not expected early in 2007. Look for 1.2860/1.3060 to contain the price action this week.
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