The early bulls are getting the worm and who the hell wants a worm? EUR/USD has pulled back a cent from the 1.3335 intraday high (equalling yesterday’s post-ifo high). the failure to break to new highs combined with a sharper than expected decline in German inflation (0.5% m/m versus expectations of -0.3%) has helped catch the market long.
Dealers also say they hear whispers that China may have sold above 1.33, but that may just be the price action talking. If China did sell, that would further allay fears that they have their noses seriously out of joint over the Geithner kerfuffle.
EUR/USD is consolidating now in the 1.3235 area. Support lies at 1.3200/05. Small stops lie below 1.3300.