EUR/USD is dipping back below the 1.3500 level, unable to get a boost from the willingness of the IMF to explore an alternative reserve currency (despite US protestations it won’t sign on). The single currency is trading weak against all the majors after very strong rallies in some of the crosses in recent sessions, particularly EUR/JPY which has fallen more than 2.5 yen from its overnight highs. EUR/GBP is also near session lows as inflation is not declining as quickly as expected in the UK.
I think what we’re seeing today is a continued hangover from yesterday when EUR/USD was unable to take advantage of the explosive rally in asset markets around the globe. It was also unable to take advantage of the Chinese white paper on a new global reserve currency or the tacit IMF support for at least discussing the idea at the upcoming G-20.
One of my stock phrases is if it can’t go up, it must come down. I think that’s where we are at the moment.
Stops are eyed below 1.3480 and especially below 1.3410/20.
