The market is focussed totally on EZ woes and the EUR has taken the lead in the so-called ‘race to the bottom’ but statements overnight show that the Fed and the BOE aren’t giving up without a fight. The prospect of QE3 is becoming more popular with Fed officials according to the latest FOMC minutes and the BOE also seemed to strengthen the case for further easing in the UK. Once the Greek situation gets sorted out (again) one way or the other, then the market will go looking for another focal point.
This doesn’t help us much when trying to figure out what we should do today, but the logical play in EUR/USD is to stay with the recent bear trend and sell rallies in expectation of a 1.2625 test in coming days.
