The pair closed in NY Monday at $1.3593, the rate having held close to its intraday trading base of $1.3582, after it had squeezed lower from earlier European highs of $1.3669. Early NY comments from the Fed’s Bullard were seized upon, saying the Fed is closer to its inflation and employment goals, which following Friday’s solid jobs report tends to show how data dependent the Fed is. An interesting note from CitiFX Wire noting client trading behaviour noting that hedge funds normally pre-position ahead of risk, while real money generally wait for confirmation of a change before adjusting portfolios. With this in mind hedge fund profit taking from short positions support the market while real money only just beginning to sell. Added to this large optionstructures in the market, the $1.3600 level holding the strike of a large expiring option (E1.6bn, with E4bn to roll off here Thursday), along with large expiries at $1.3550, $1.3635 and $1.3650 which are expected to help keep rate within an outside range of $1.3500-1.3700. Trade in Asia managed a 9-pip range of $1.3585/94 with further downside the main outlook. Support $1.3580, stops $1.3570-55. Resistance $1.3610/15, stronger $1.3630-50.
