This pair will eventually break out of it’s rangebound mentality but the momentum still seems to be lacking as does market conviction. I still believe the principal trend in the market is against the USD so the more likely breakout in EUR/USD will be to the topside. Judging by reports from the interbank and futures markets, the EUR/USD market is positioned relatively neutrally at present, meaning that when a move starts it could be prolonged as the market finally gets on board. Sovereign players are still buying dips and real money funds have joined in over the last 48 hours, reinforcing my view that buying dips is the correct medium-term play.
I’d suggest a 1.4225/1.4525 range over the coming week with a bullish bias. We may see either side of this range on a few occasions once the Bernanke speech approaches.
