Below is an article titled euro deflation blowout averted but the market remains cautious that we collected from various sources. All credit goes to its original author.
EUR/USD is still hanging in there but not even the rise in core inflation has given it a lift. The overall view seems to be that the market is thinking that falling inflation is firmly back on the agenda and is going to force the ECB into action.
I’m not so sure that’s going to be the case just yet, but I’m not going to fight the market on it unless it starts getting hysterical come the next ECB rate day.
We’re still looking soft under 1.3550 and the waters may be a little muddied with month end flows but the willingness for sellers to hit bounces shouldn’t be ignored. Desk Trader suggested yesterday that there were big sellers in and that maybe they were working on behalf of the ECB to get the rate down. At the moment it looks like the downside is more favourable than the upside. Watch out for the US data today again as if we get a broad risk rally on good news and it doesn’t join in again, then it could be in real trouble. That said, we’re seeing a bit of risk off in the other majors and the euro isn’t reacting to that either, so it seems increasingly even more out of step with the rest of the market.
EUR/GBP is still managing to walk the tightrope support line with only brief wobbles at the moment. The 55 h4 ma has been halting the upside and the month end pops we’ve seen today.
At the moment I’m favouring a break of the support but there’s also money to be made jobbing the line while keeping it tight. The crunch may come when the month end stuff is all done and dusted. The line comes in at 0.8214 today and there’s weekly support also at 0.82098.
EUR/USD has fallen below the support line I highlighted yesterday and in the main it’s now acting as resistance. Well, it had done when I was writing this and we’ve just had the pop up to 1.3573
I was going to write look for a decent break back above to hold and we might see the pair try and recover some lost ground. It’s happened so get watching
Author: Ryan Littlestone
Ryan Littlestone has been working in financial markets for more than 20 years. Wide-eyed, he stepped out of Bank station in London to join LME founding member Rudolf Wolff where he worked his way to the main order desk and brokered customer orders to the LME floor and across virtually every global market. An opportunity to help set up and run a new LIFFE floor operation saw him catch the trading bug and it wasn’t long before the pull of the pits was too great to refuse. He became a ‘local’ and has been trading his own account for more than 10 years.
euro deflation blowout averted but the market remains cautious
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