EUR/USD made a fresh run to the 1.4522 level before stalling. Firm equities, rising oil prices to play catch-up gold and central bank buying for reserve diversification are all helping support EUR/USD on even the most modest dips.
USD/CHF worked through a 1.0445 bid that some thought was being worked fro the SNB. That pair fell to 1.0435 before a modest rebound.
With markets range bound for so many months, there is fear that many market players are short options. If that is the case, price action could get disorderly on the topside if momentum picks up. The disadvantage of being short options in a rising volatility environment is that options become pricey just when you need to buy them back, The alternative is to “delta hedge”, or buy the spot market at higher and higher levels, an equally unappealing prospect. Sources say a break above the 1.4550 level will bring a fresh influx of options-related buying.
Near-term, the 15:00 GMT London fixing is eyed for demand from real-money accounts. Asset managers tend to be attracted to markets that are breaking out of stubborn ranges. No need to head when things aren’t moving. Once they start to move, these guys tend to jump on the band-wagon.
Keep an eye on 77.00 support in the USD index. A break of 77.00 support opens the way for a slide toward 76.00 lows in the days ahead.
