It’s been a duller session than one would have imagined after the reflation trade frenzy returned during the US morning. Unable to overcome resistance near 1.5560, EUR/USD has dipped back toward the base of the range at 1.4405/10. Small stops are seen below 1.4400 now with more below 1.4375. The lower we dip, the greater the likelihood that traders will conclude we remain stuck in a range between 1.4230 and 1.4460, opening up the downside. If 1.4400 holds, look for more pressure on the 1.4460 area ahead.
Aside from the greenback, the rest of the reflation trade is quite firm. Oil closed up better than $2 at $81.50, Gold is off its highs but still up better than $20 and equities are at 15-month highs. Emerging markets are in even better shape, with the Bovespa more than 2% firmer on the day.