The weakness of the last last 36 hours has reversed itself but we’re still not making much hay above the 100-day moving average at 1.2567 and the 38.2% retracement of the drop from 1.3487 at 1.2595 (first broken cleanly last Friday.
Odds of QE3 have increased and the ECB’s bond buying program has pretty much been made known. So what’s the next catalyst the topside?
Payrolls? I’m guessing not. A poor report ensures QE3 at next week’s Fed meeting, but we’re pretty much already there.
An affirmation of the ESM by the German constitutional court? Maybe for a very short-term pop but the risk of a “no” weighing on the euro seems greater than the boost the single-currency will get from an affirmation, in my view.
Maybe it will just be the passage of all these event risks, which will allow the market to resume focusing on reasonably bullish near-term techs. So long as we hold above 1.2450 or so, I think the topside beckons, but if we don’t move up by the end of next week, once all the noise is out of the way, than we may be out of steam.
Bulls want to see 1.2650 overcome to get the blood pumping again but there are barriers at that level, rumor has it.
