I think if we are anywhere above 1.3450 when the LTRO results are announced we will trade through 1.3500, no matter what, to trigger the barriers during the liquidity vacuum that will accompany the announcement.
A large tender will be spun as a euro positive as the banking system, and therefore sovereign debt markets. will be liquid for the foreseeable future. A small tender will be spun as a sign that banks don’t need large amounts liquidity. The proverbial heads I win, tails you lose scenario.
My guess is after a knee-jerk reaction higher, we then get some profit-taking later in the week. 1.3550/70 is resistance overhead while 1.3360/90 is solid support on pullbacks near-term.
Offers are seen near-term in the 1.3480/1.3500 window.
