Another Chinese holiday but the Euro drew some support overnight, as Japanese traders focused on the BoJ. However, this evaporated after the release of weaker German PPI data. EUR/USD was sold back from 1.3189 to 1.3133. Stops were tripped with 1.3160 and 1.3145 tipped as the best levels here.
Eastern European Dollar buying against both the Euro and the Pound is cited as the trigger for the move lower. However, value is noted on a drop to the 1.3130's. Spot now trades near the mid-point of the 1.31/32 comfort-zone. Looking ahead, the US return will be key to S/T direction despite the orders on both sides. US inflation data, due Wednesday, is eagerly awaited as the US rate outlook remains the driving force for longer-term directional plays.
Intraday, however, only the 13:30 GMT release of January Chicago Fed Activity data is eyed. The index read 0.04 at the previous release. On the options front, a EUR 1.2/5Bln 1.3100 strike is due to roll off at the NY cut at 15:00 GMT so expect any drop back to this level to generate option related supply while gamma sellers still protect the 1.3200 barriers.
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