EUR/USD is bouncing back smartly after hanging onto support in the 1.4105/10 area. We’ve bounced thus far into the mid-1.4140s.
It’s been an interesting morning with a round of risk aversion sweeping the markets though it is not exactly clear what risk traders are fearful of at the moment.
A Latvian downgrade overnight (and the fallout on European banks, particularly in Scandinavia), Chinese industrial production missing expectations and fears of a pullback in a frothy global equity market seem the most likely to me. In the more medium-term, the market needs to deal with the likely shift in power in Japan from the long-reigning LDP to the DPJ.
