EUR/USD has stabilized after dipping to 1.4150s and has recovered to the low 1.42s. Resistance lies in the 1.4220/30 region with the 38.2% of today’s 1.4337/1.4151 decline. There is also an hourly top in that range.
A bout of profit-taking in the reflation trade has hit the market today as commodity prices and equities give back some of their recent gains. US data was in-line with expectations today, but was less ubeat than the data seen earlier in the week.
The euro is somewhat undermined today by renewed concerns that European banks have massive exposure to the Baltic states along with other emereging European regions which could prompt them to have to raise billions ihn capital as the US banks have just done. There is also some profit-0taking ahead of tomorrow’s ECB meeting for fear that EUR strength could become a verbal focus for M. Trichet.
Bids are eyed at 1.4150 in EUR/USD with stops below. Sovereign bids lie down in the low 1.41s, dealers relay.
