The euphoria that greeted the hint from the FOMC that it will begin buying bonds again before too long seems to have petered out and risk aversion is beginning to rise.
Europe is one again the focus, with sovereign debt woes forcing bond spreads between Germany and the periphery to record wide levels. Evidence of a second half slowdown in European economic activity is undermining the single currency as well.
The loss of support at 1.3350 support has made clear a near-term top is in place on the short-term charts, sending momentum players scurrying for the sidelines. Bids are eyed in the 1.3250/70 area if the sell-off intensifies… We trade now at 1.3322.
UPDATE: The 200-day moving average at 1.3308 is providing support so far on pullbacks.
