It might be more than normally prudent to keep stops tight in EUR/USD today, as it’s gapping to and fro in response to headlines. Almost everyone with a Eurozone government ID appears to be a player in the early going; first German Economy Minister Roesler was quoted saying that the German high court ruling makes it impossible for Germany to back Eurobonds, and that the German government “expressly” opposes issuing them in any case.
This was followed by the seemingly very dismal news for Greece that Austria’s parliament committee did not approve an upgrade of the European Financial Stability Facility (EFSF), making it very difficult for Greece to get the second installment of its bailout package.Â EUR/USD dove on that, only to pop right back on a statement by Austria’s finance minister (you knew there had to be one, right?) indicating that Parliament had “only rejected changing the agenda”. I have no idea what that means, either, but it got EUR shorts covering in a hurry.
Even the 30 minute chart of EUR/USD shows basically sideways movement, and the assumption this morning was that the range was likely to be defined by 1.3650/1.3750. There are plenty of players who would be delighted to play a well-defined big figure range all day long, but it’s been too choppy to make anyone very comfortable. In any case, 1.3600/1.3750 now looks like the range, and I would expect a break of the low to hit some stops.
P. S. I neglected to mention that stops would likely be found on a break of 1.3750, as well. In the event, following a conference call between Merkel of Germany, Sarkozy of France, and Papandreou of Greece, a Greek government spokesman stated that Greece had told its partners that it is determined to meet all of its obligations. “Determination” isn’t necessarily the same as “ability”, of course, but the promise was enough to send EUR sharply higher, reaching 1.3771 following the break of 1.3750.
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