EUR/USD has had an impressive rally this morning, spurred in part by a big drop in reserves at the ECB, by favorable technicals and on a rise in US pending home sales, which lowered risk aversion a bit.
Analysts at some of the large banks are explaining away the drop of EUR 38 bln in reserves at the ECB as revaluation effects( though I though they revalued on a quarterly basis…) and not a sign on intervention. Either way, having $50 bln vanish in a month is not a plus for the struggling EUR. I doubt the ECB bought anything like EUR 38 bln in the market, but that could have bought a fraction of that and lost the rest on their bond holdings…
1.3015 is our topside target based off the double-bottom discussed earlier. That level is also the 50% retracement of the slide from above 1.33 to 1.2704.
