At 7 this morning EUR/USD was trading in the low 1.4950s and here we are eight hours later, right at the same levels. EUR bulls are a bit disappointed that the single currency was unable to keep pace with gold which set a fresh record just above $1150 today. That, combined with comments from the Fed’s Bullard suggesting that the Fed won’t hike until 2012, should have lit a fire under the EUR, but it was more like a flicker. We managed 1.4990 but another round of Asian central bank sales helped keep a lid on the market.
The moral of the story is that we rarely go from the bottom of the 1.48/1.5050 range in a straight line. There are usually some wiggles along the way. The wiggles are as a result of the Asian name defending the extremes of the range offloading the protection in the middle. To illustrate, yesterday they bought the low 1.48s and today sold the high-1.49s, giving them fresh ammo to defend whichever side comes into play next. Today was one of those wiggles…
Some are pinning hopes on the 1.48/1.51 structure expiring this Friday to help break us out of this range. Word of warning. Often, these folks will rollout the trade using some of their winnings, keeping markets all bottled up in the process….
