The overnight session in Asia was very quiet with the JPY and USD seeing some very marginal improvement. EUR/USD is down at 1.3380 from a North American close Monday around 1.3405, while EUR/JPY is down at 132.20 from around 132.60.
Risk appetite got a boost yesterday from the release of better than expected U.S. pending home sales and construction data, and remains in pretty good shape. That said, a couple of possible bumps in the road are looming in the shape of US bank stress test results and the latest ECB meeting.
The stress test results are scheduled for release Thursday. There are reports that around 10 out of the 19 banks being tested may need some capital infusion.
On the same day we have the latest ECB meet, and there is a great deal of uncertainty surrounding the outcome. Some feel the recent improvement in economic data may cause the ECB to hold fire on a further rate cut and introduction of quantitative ease.
Interesting to hear the Citibank technical team is still looking for a higher EUR/USD, with a short-term target of 1.3739. Personally feel they’re on the right track.
