Steady action through Asia with a 25-pip range containing the better bid EUR. All the carry trade talk and supposed activity last session looks a bit overdone and there is a risk that the Dollar might stage a modest comeback despite the US holiday. Price has stalled at the 1.2975 level and looks set to trade tight around a 1.2955 pivot into the session close.
The German IFO for November came in stronger than expected at 106.8 from 105.3 and helped lift the EUR from 1.2940 to the 1.2975 top. The EUR appears to be drawing additional support from further carry trade unwinding. Softer USD/CHF and a fall in USD/JPY have filtered through to EUR/USD. The big option barriers and vanilla expiries are at 1.30 but the battle to trigger stops and protect the exotics will probably be on hold until next week.
Big picture dynamics still favour a 1.30 test near-term. Only a drop under 1.2800 is likely to trigger sizeable stops. For today 1.2925-1.2975 on the wide with downside risk.
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