Into European trading and more option related sales in the 1.3140's kept the topside capped. These are linked to another EUR 400Mln 1.3150 strike and with the topside looking limited, when you add more official sellers into 1.3170/75, the downside came into view. M&A sales were then noted as the price drifted lower with BBVA/Compass cited as the deal behind the flows.
Euro Zone data underpinned the Euro ahead of 1.3100 as the trade surplus continued. Bids into 1.3110 now look to prop dips with eyes now turning to the EUR TWI as Trade Weighted Euro hit a 2-month high at 105.76. Looking ahead, US data will drive volatility into North American trading. US PPI and Housing Starts are due at 13:30 GMT and both the January numbers will need to support the Dollar if further sales are to be negated with a fall of 0.5% M/M currently expected.
The core headline is forecast up 0.2% with a lesser reading likely to hurt the US unit. Following this 15:00 GMT sees weekly ECRI numbers and the latest Michigan Sentiment numbers. Stops in EUR/USD are noted below 1.3095 and 1.3075 while on the topside a break of 1.32 adds momentum.
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