The next time someone asks me what can happen in a low liquidity environment, I’ll point to today.
The rule of thumb is to always fade big moves when markets are illiquid. Clearly, some type of major flow was going through the markets — someone who needed to complete a huge euro trade — and they tripped some stops to nearly 1.39. After the momentum stalled, the short-term sellers stepped in and have knocked it all the way to 1.3735, up less than 50 pips on the day.