The EUR/USD opened around 1.3330 in Asia after soaring higher on Friday when more weak US data intensified speculation that the Fed will have to ease some time in the first half of 2007. The EUR/USD broke above 1.3350 in early Asia to remove a 1.3350 barrier and trigger stops up to 1.3370.
The rally proved short-lived as good buying of USD/JPY by the arriving Tokyo gave the USD a broadly bullish tone and the EUR/USD slipped back to 1.3330. The USD/JPY proved to be incessant into the afternoon and the EUR/USD slipped below good buying interest at 1.3320 to trade at 1.3309 before settling again around 1.3315. The EUR/USD received some support from EUR/JPY demand with the cross trading to a new all-time high at 154.18. Sentiment towards the EUR/USD is extremely bullish with many looking for 1.3500 to break early this week.
The problem might be that too many are looking for that and a small correction might be needed before the energy to take on historical levels is sufficient. A break below hourly support around 1.3305 would relieve the upward pressure and target 1.3260.
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