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Tuesday, May 22, 2007

EUR/USD: What a Long, Range Trip Its Been

EUR/USD has spent the last 29 hours lodged between 1.3435 and 1.3475 and after failing recently at 1.3470, looks no closer to a breakout. Looking at the calendar, Thursday looks like the most likely day to spur some renewed action. Ifo is due that day as are US durable goods and jobless claims.

Let's hope we don't have to wait that long. Dealers suspect the usual central bank suspects are helping shore up the bids side in the 1.3435/40 area while stale longs sell into strength at 1.3470. Given the market's entrenched long EUR position, we still think the risks are skewed to the downside, at least from a risk/reward perspective.

More pain would be done to more players on the downside than on the upside, but this is offers no guarantees of profit as it has been the case for quite some time. EUR/USD trades quietly at 1.3460.

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