One stool of the three-legged EUR/USD rally may be weakening. Asian central banks have been less active buyers of dollar against their local currencies so far this week which means they will have fewer reserves to diversify into EUR. AUD, etc.
So far, we’ve seen no ill-effects from that demand drying up, but with the market holding near-record long positions in EUR/USD, bulls will hate to lose that source of demand.
The other two legs of the stool include QE and rising risk appetites as commodities and equities rally.
