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Sinks Back Toward $1.1900 After Another Failure to Break $1.1990.

EUR
MNI (London)
  • Reaction to Wednesday's dovish FOMC had seen EUR/USD extend recovery gains to $1.1989 in opening Europe Thursday only to reverse sharply as markets reacted to the spike higher in UST yields.
  • Rate dropped to a low of $1.1909 in early NY, recovered to $1.1939 through the 1600GMT fix before extending pullback lows to $1.1906 ahead of the close.
  • EUR/USD touched a high of $1.1921 in early Asia before squeezing to a low of $1.1902, recovering back toward $1.1920 into early Europe.
  • Dovish FOMC has boosted inflation concerns in the US and prompted another move out of bonds, UST 10-yr yield touch 1.75% Thursday, currently consolidating around 1.70%. Nasdaq losses yesterday impacted Asian equities, which along with negative sound bites coming from the Sino-US meeting in Alaska, has dented risk, keeping USD generally buoyant.
  • Germany PPI 0700GMT. ECB Panetta (dove) speaks at 1045GMT. Light US calendar.
  • Support into $1.1900, E1.1bln of EUR puts roll off today with strikes set between $1.1888-1.1900, a break of $1.1900 to expose support at $1.1883/72(Mar16 low/76.4% 1.1836-1.1990) with the Mar10 low at $1.1869 close behind. Below here exposes the 200-dma at $1.1854 ahead of the Mar09 YTD low at $1.1836. Initial resistance seen between $1.1955/70 ahead of stronger interest into $1.1990. A clear of $1.2010, then $1.2040/55, needed to bring the Mar04 high of $1.2067 into play(see MNI Techs below)
  • MNI Techs: EURUSD was weaker yesterday as the pair retraced Wednesday gains. Attention is on Wednesday's price pattern, a bullish engulfing reversal candle. It suggests the recent pullback between Mar 12 - 16 has been a correction and that a bullish theme has returned. The pair still needs to clear resistance at 1.1990, Mar 11 high to strengthen the argument for bulls. This would open 1.2067, Mar 4 high. Support to watch is at 1.1883, Mar 16 low.
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets

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