Bears prevailed early for EUR/USD as the USD was firm & risk soft on China's Fin Min stating sub-7% growth isn't a big problem. The pair slipped from 1.3060 at the open & was pushed along as above f/c US PPI spurred Fed taper ideas. Stops at 1.3020 & 1.3000 were hit. Little follow through was seen (1.2999 low) & the mkt was caught short into a soft U. of Michigan report. EUR/USD lifted as intra-day bears covered & EUR buyers against AUD, NZD & GBP emerged. EUR/USD climbed off the lows & cleared sov offers near 1.3060 & 1.3080 on Bullard's dovish stance. Early rumors France was to be downgraded came true. Fitch's downgrade to AA+ from AAA spiked the pair from NY's 1.3092 high to 1.3032 but since Fitch was only catching up to Moody's and S&P mkt reaction was limited. The pair recovered & sat near 1.3065 into the close. A bullish engulfing candle is in place this week after the 1.2740/60 support test failed. RSI is biased up & the US loses some yield advantage. A bounce back to the June highs cannot be ruled out now with such a powerful technical signal.
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