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Asia COVID Concern Counters Friday Risk Recovery

EUR
MNI (London)
  • Recovery off Thursday's low of $1.2052 picked up pace through Friday's session as market covered back into the weekend as risk moved back into favour.
  • EUR/USD touched a high of $1.2148, ahead of its $1.2141 close.
  • Asia opened at $1.2135 before it edged through Friday's high to $1.2151(76.4% $1.2182-1.2052) where it met decent resistance.
  • Traders note that the $1.2150 level holds the strike of $1.94bln of EUR puts for today's NY cut (another E1.5bln of EUR puts roll off Wednesday).
  • COVID spread concerns in certain Asian centres acted to dampen risk appetite, with JPY demand reported to have led the correction away from $1.2151 via EUR/JPY sales, squeezing back to $1.2127 ahead of the European open.
  • Support $1.2100-1.2090 ahead of $1.2075/70, stronger into $1.2050.
  • Resistance $1.2151, $1.2174/84, stronger into $1.2200 ($1.2197 76.4% $1.2349-1.1704, 2021 range)
  • US Empire Mfg 1230GMT, NAHB Housing Market 1400GMT.
  • Fed Clarida (dove) and Bostic (hawk) speak after 1400GMT. Interest on comments following last week's US CPI release.
  • MNI Techs: EURUSD found support last week at 1.2052, May 13 low. This level represents a key short-term support where a break is required to highlight a short-term top and the risk of a deeper pullback. Attention is on resistance at 1.2182, May 11 high where a break would confirm a resumption of the recovery that started Mar 31 and would signal scope for gains above 1.2200. A break of 1.2052 would instead expose 1.1986, May 5 low.
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
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MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
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