EUR/USD has settled down close to 1.3290, where it sat shortly before the subprime mortgage rumors and comments from China's Zhou circulated. Carry trade unwinding has slowed but bounces are modest as yet, helping keep a strong lid on EUR/USD rallies. Despite the earlier flurry, offers at 1.3310 held fast, dissuading longs to a significant degree.
Dealers note talk of bids layered down from the 1.3270 level to 1.3250 near-term suggesting a very quiet afternoon could play out today. Dealers can use the excuse that the Fed is meeting to justify seeking the sidelines though odds are they will not move too far from their present posture given last week's inflation data.
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