Opened early Europe at $1.3069 EUR/USD closed in NY at $1.3050 and drifted higher through the Asian session, extending the recovery off NY lows of $1.30165 to retest NY highs at $1.3080 (61.8%$1.3120/1.3016) before early Europe extended the move on to $1.3095 (76.4%). Flows through Asia were described as very light, Japan holiday and markets gearing down ahead of the elongated weekend Christmas holidays prompting a sharp cut back in liquidity which has overlapped into Europe. WSJ report that the Fed is considering indicating that interest rates are likely to stay close to zero until 2014 or beyond (from current communication of ‘until mid-2013’), as well as ECB Bini Smaghi suggesting in an
interview with the FT that QE should be an option for the ECB if deflation risks emerge both aided the move up in EUR/USD in Asia, the rate extending the move to $1.3095 (76.4%) in opening trade before drifting off and settling between $1.3060/80 ahead of the NY open.
EasyForexNews Research Team