Backing an filling ahead of ECB
No one expects anything major from the ECB but a shift in intonation from Trichet, a pause, a wink, anything could be seized upon. The one word EUR/USD bulls don’t want to hear is “brutal”, Trichet’s codeword that EUR strength has gone too far for his liking.
Asian authorities are up in arms after QE2, saying they will do all in their power to slow hot-money capital flows into their economies. Intervention to buy dollars is the first course of action and diversification of those newly acquired reserves pushes EUR/AUD/GBP ever higher…
1.4200/10/20 bids are seen on dips near-term while offers lie at 1.6265/70 and again ahead of 1.4300 barriers.
Technicians almost universally eye an extension of the rally toward 1.4365, the 78.4 retracement of the 1.514/1.1875 slide. You know the old saying: Every sunken ship has a chart room!