The EURUSD complacency seems to be fading – and before the EU summit has even introduced its first headline risks. Today’s swift move has shifted the resistance level for EURUSD a few notches lower now.
We’ve got a fairly sudden break lower in the EURUSD given that the EU summit is only just getting underway, but a big rally in the bond market this morning tipped off the market that the stance was quickly tilting into risk aversion mode again, and then the somewhat weak German employment report was used as an excuse to take short EURUSD positions.
For EURUSD, this means that the 1.2500 magnet is abandoned now and the overhead resistance tactically shifts a bit lower to 1.2450 now (see chart below), with the ultimate support in the near term at 1.2286. One wonders at the timing of this move and its vehemence, given how indecisive and complacent the market appeared in recent days – particularly coming into this morning. Also note the pattern reversal on the day in the likes of AUDUSD, which has reversed all of its gains on the day. Stay tuned.
John J Hardy,
SAXO BANK