Let’s gaze into our crystal ball for a moment. It’s Monday morning in Sydney: The G20 has passed with nothing approaching a framework on exchange rates/current account gaps. What’s EUR/USD gonna do?
My guess is we rally right out of the gate as traders put back on short dollar positions on the status-quo being maintained.
What happens next is really the key. If we stall again in the 1.4000/50 level than I would guess we are in a for another round of profit-taking early in the week.
Keep an eye on gold as well. A sustained move back above the $1350 level could fuel more dollar sales. A failure would argue for more profit-taking there as well.
