Closed in NY Friday at $1.2720, off lows at $1.2697, and was marked down at the Asia open to $1.2695. Rate was seen under pressure into Monday’s market open as traders reacted to weekend comments that the IMF is losing confidence in Greece and a Germany advisor reported saying that Greece has already defaulted. Stops through Y97.50 were targeted and triggered in EUR/JPY which took EUR/USD to early lows of $1.2666. Rate recovered on an FT item, which suggested that the UK has left the door open to increasing UK funds to the IMF for eurozone aid, taking the rate up to $1.2705/10. Macro offers restricted initial gains, with a reported comment from the Czech central bank that Greece should leave the eurozone taking the rate back into the $1.2680’s. Real money and leveraged demand emerged into the dips and allowed rate to recover, edging above $1.2700 into early Europe, extending on to $1.2728 to fill the Friday/Monday gap. Market remains thin with moves to be dictated by headlines. Merkozy meeting today with a press conference expected around 1230GMT, but more attention will be placed on events later in the week with Spain and Italy bond auctions due Thursday and Friday respectively, as well as the ECB rate decision on Thursday. Another 25bps cut is seen in the pipeline though mixed view whether they will act this Thursday or wait until the March meeting.
EasyForexNews Research Team