EUR/USD is as we know tied in by a big option play. It is interesting to note that since early last week we have been hearing that the buying-interest significantly outweighs the selling-interest. In other words, the option player, namely China, has a natural interest to buy EUR/USD and this combined with the option defence gives them a very strong bid whereas they may sell to defend the option but they are more uncomfortable being short. The same thing happened when they tried a similar play on the AUD/USD .6750/.7250 some months ago.
Add in to the mix the fact that China cannot get the hard commodities off the ships in their ports quick enough meaning that their stockpiling efforts will have to go on hold for a while. China can now either sit on their trade-dollar surplus or at least hedge some of it by buying EUR. This is what they seem to be doing. Once the backlog of container ships has been worked through, China can resort to buying commodities and we then can sell EUR/USD more freely, hopefully from levels around 1.50!
