Hey, I’ve got a three year old, I can’t get those songs out of my head…
All eyes are on the developing head and shoulders top in EUR/USD this morning as risk aversion prompts some trimming of short USD positions across the spectrum.
Iran and North Korea continue to via for the title of Rogue of the Week. Iran’s election drama continues to unfold with mass protests garnering world attention. North Korea is threatening nuclear war if its cargo ships are inspected by the US or its allies.
Ambrose Evans-Pritchard has spotlighted both the Latvian problem and a European credit crunch, Euro negatives that raise the market’s foul Monday mood. Russia and the other BRICs are ratcheting down the anti-dollar rhetoric in advance of their summit tomorrow.
1.3800 is the key point for EUR/USD near-term. A break of that level portends a rough 5.5 cent pullback on a measured move basis. Expect central bank buying on dips near-term to make a break a formidable challenge.