EUR/USD is consolidating in the 1.2670 area, off the spike highs at 1.2690 that came on a combination fix-related buying of EUR/JPY as well as a turn to the topside in US equities. The morning slide met with demand from bids out of the Far East toward 1.2600/10 after the very grim ISM data at mid-morning.
The next hurdle for the market is the Fed’s Beige book, prepared in preparation for the FOMC meeting the week after next. It should come as no surprise that the Beige Book will portray a rapidly slowing economy. The Fed is on the case and the market is already assuming the worst. As we saw much of last week, markets are growing calloused regarding soft economic data. There is only so much you can beat a dead horse…
Should the markets look past the Beige Book, look for a grind toward the 1.2740 area. Modest resistance comes in at 1.2710 and 1.2730.
