The pair opened at $1.2317 on Tuesday, having recovered from a NY range of $1.2247 to $1.2344. Last night dovish comments from ECB’s Nowotny sent the pair to fresh multi-year low but dovish comments from Fed’s Lockhart sparked a sharp reversal. This morning the euro extended decline lower to an initial low of $1.2303 from session high of $1.2319, on back of a WSJ article by Jon Hilsenrath, on Feds could drop the “considerable time” phrase next week. The euro retraced back to $1.2314 on some euro-yen buying as dollar-yen hit high of Y121.00, but the rate quickly reversed lower to hit fresh session low of $1.2292 on heavy yen cross selling. But option expiry at $1.2300 supported the euro to rebound to $1.2317 last. The WSJ article also triggered a collapse in aussie, prompting strong selling interest in aussie-yen & euro-yen and triggered stops along the way. Bulls eye a retest of yesterday’s high of $1.2344 ahead of medium offers & small expiry reported at $1.2350, with further offers/stops at $1.2365. While on the downside, reported option expiry Tuesday at $1.2300 (E415 mln) and bears eyeing a revisit to yesterday’s multi-year low of $1.2247 but demand on approach reported at $1.2250/55 with further demand at $1.2230/40 level.
