Tight price action from the European open, which is indicative of the broader market, and has some basis in the fact that the market has to factor in more than the usual amount of G-7 uncertainty. The market is also trading cautiously ahead of tomorrow's ECB meet, not because of potential rate moves but with regard to the rate outlook for Europe.
EUR/USD failed to make any headway above 1.2990 overnight and despite an early European push to 1.2995 the market appears to be thick with offers up to the 1.30 level. We are hearing of bids at 1.2960-65 and stops are reportedly building under 1.2950. The initial chart points are at 1.2915 and 1.3075, too far from market to provide targets through the early European session.
The bigger picture continues to highlight a sideways bias following the early January price slide from levels approaching 1.3300. Once the ECB has had its say, Thursday, the EUR market will return to the sidelines, moved only by pre-G-7 EUR/JPY activity. It remains to be seen whetherthe Yen has its day at the G-7 or whether the usual pre-meet speculation evaporates, as it usually does.
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