EUR/USD is not alone in its struggles today. The crosses are seeing selling once again as EUR/GBP continues to slide as does EUR/AUD, the new reflation darling.
The market is quiet long of EUR/USD and has been taking some chips off the table for the bulk of the session, trimming exposures ahead of the ECB meeting tomorrow. There has been good buying of overnight puts in EUR/USD today, protecting the downside if the ECB goes nuts tomorrow and aggressively pursues quantitative ease.
Probably the clearest sign that the ECB means business regarding QE is if they announce the purchase of government bonds; that would come as a total shock to the market. Instead, expect more technical moves like extending the maturities of repurchase agreements with banks and buying commercial paper.
The market is in flux at the moment as it transitions from EUR/USD being a component of the reflation trade to one where the euro is shorted against beneficiaries of a global rebound like AUD and CAD. The buck is almost on the sidelines at the moment, frustrating EUR/USD enthusiasts like your humble scribe.
EUR/USD is finding some buying in the 1.3270s and trades now at 1.3287.
