Euro likely to be sold into strength

EUR/USD managed to hold onto support at November lows in the $1.2358 region.

Source: Bloomberg

The pair found some buyers and has since pushed back above $1.2400. A much better than expected German Ifo business climate reading helped the pair recover from its recent slump. The Ifo business climate reading rose for the first time in seven months. Meanwhile, peripheral yields continued to fall with the Spain 10-year dropping below 2% for the first time. Of course, hopes the ECB will buy sovereign debt have been the key drivers of this. ECB members were also on the wires including Ewald Nowotny, who said the ECB should wait for the effects of measures already taken before adding more stimulus. While the single currency popped a bit yesterday, also helped by the risk-on tone, I still feel the fundamentals haven’t really changed and this is just another opportunity to sell. If the pair gets to $1.2500, then I’ll be looking for selling opportunities.


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