He told ya yesterday there was a “good chance” we’d see the 200 dma in EUR/USD at 1.2834 tested, and tested it was. Tested and found wanting as it happens. Congratulations to those among you who also saw 1.2834 being tested, well done you!!
Pete also plumped for 1.2900 before 1.2700 in the latest EUR/USD poll, and has been within a measly 17 pips of his goal. I can tell ya he’s getting rather excited.
The greenback has been under accelerated pressure of late, underminned by a combination of factors. These include Moody’s warning that it may downgrade the US AAA rating. speculation the Fed will introduce QE3 tomorrow, and last but not least anticipation the German constitutional court will today rule Germany’s participation in the permanent bailout fund in line with the country’s constitution.
Main focus right now is the constitutional court decision. A negative response and the single currency likely falls hard, very hard. A positive repsonse but with stringent revisions and it’s hard to see the euro getting much of a lift. A positive response with light revisions and the euro should tack on further gains. How major these gains might be is debateable, as a positive response must be already discounted to some fair extent. There is a chance, even with light revisions, that we see a classic buy the rumour, sell the fact price action. As they say, all will be revealed in the fullness of time.
We sit presently at 1.2868.
UPDATE: I nearly forgot, barrier option interest remains at 1.2900. As we’ve seen of late, barrier option interest has been merely acting as a speed bump. I guess the higher we go though, the more pronounced the ‘bump’