Late July lows at 1.3885 have been probed so far as the reflation trade comes under a stern test. Oil prices are down sharply this morning as global rebound hopes fade. A raft of geopolitical headlines crossed the wires over the weekend including the North Koreans popping off a number of missiles, the Saudi’s reportedly agreeing to turn a blind eye toward any attack by the Israelis on Iran’s nuclear program and civil unrest in China’s far west which could bring international condemnation.
A break of the late July lows at 1.3885 in a significant way opens the door to a 1.3825 test. Large 1.3800 exotic options are seen struck at 1.3800 and may be defended near-term.
