Closed Monday’s session around $1.2665, having consolidated Friday’s drop to $1.2624 within a range of $1.2626/82, with trade generally subdued due to Monday’s MLK US holiday. Rate initially dipped into Asian dealing Tuesday, marking lows at $1.2648 as early traders reacted to the S&P downgrading of the EFSF from AAA to AA+ ahead of today’s bill auction. However, this early move quickly reversed as rumors that Chinese GDP would come in above expectations swirled. Confirmation provided markets with a general risk on tone, the move through $1.2690 triggering stops which provided the added momentum to take rate to overnight highs of $1.2737. Confirmation by S&P of EIB’s AAA rating also aided euro recovery. Rate has retained its firm tone into early Europe with rate currently holding around $1.2728. Traders note that sell interest seen in place between $1.2750/70, with one adding that they see this area as a good place to reopen shorts. Germany ZEW at 1000GMT the morning focus along with the EFSF bill auction at 1100GMT. US Empire State Index at 1330GMT due as NY markets return.
EasyForexNews Research Team