This Is The Driving Force For EUR Buying
A relatively quiet start
to the new month, but we suspect that will not continue for too long.
While the vast majority of currencies were flat overnight, the GBP/USD managed
to carve out new highs, hitting 1.9268, roughly 30 pips above a solid weekly
trend-line. Despite that, we do see some lower levels being carved out over the
next 24 hours as the pair is now trading back below 1.9235.
The failure for EUR to extend its new make it clear that between 1.3330-1.3350
there is lot’s of EUR selling. The driving force for EUR buying appears to be
more about reserve shift than fundamentals of growth, inflation or outlooks.
With some data due out later in the US (personal income was just released and
better than expected) it may be the catalyst that sends the EUR a bit lower
after an impressive run.
The dollar remains in oversold territory but unable to latch on to any
meaningful bids to carry it above short-term resistance levels at 82.25-30.
However, with EUR/USD USD/CAD, GBP/USD and USD/CHF looking stretched, a move
higher in the DXC (dollar index) might propel these currencies for a minor
squeeze resulting in some decent short-term gains.
We have a few pieces of data out today that might provide such a catalyst:
7 AM PST
ISM/NAPM +1.5%
Construction Spending 56
Open Postions:
Short NZD/JPY
Short EUR/CHF
Long USD/CAD
As always, feel free to send me your comments and questions.
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