Into European trading and with the Dollar kept on the defensive EUR/USD finally managed to clear the first batch of stops above 1.2550. The price hit 1.2565 before offers were found to cap the topside, more stops are seen tight above here but sizable sellers are also camped in the 1.2575/80 region. Ahead of the North American open with the topside capped the pair has been forced to ease and aggressive traders will once again cast an eye on the 1.2500 level, where option barriers and expiries are noted intraday.
Despite the calls of late for a drop back to 1.20 (this morning a UK Clearer noted the risk in EUR/USD was for a drop to 1.2150) the Euro remains underpinned by hawkish official rhetoric. Expect this theme to continue later in the day when ECB President Trichet speaks at 14:00 GMT.
The early risk from the US is the 12:30 GMT release of August Trade data. Economists look for a USD 66.5/67.0Bln reading compared to the previous USD 68Bln headline. Below 1.2500 the 200-Day moving average line at 1.2470 will be targeted with talk of lumpy stops below here.
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