Yesterday’s shot across the bows of Russia by the US and EU is a forewarning of what further actions might be taken.
One hurdle that has been cleared today for the euro is that the German Constitutional Court has confirmed the legality of the eurozone’s bailout fund. It would have been a blow to the currency if this had failed to happen.
Attention for EUR/USD traders will now shift to Wednesday evening’s Federal Open Market Committee statement. Markets will be trying to gauge the latest thinking of Federal Reserve chair Janet Yellen and her members, and the future timeline for further reductions to the US debt-purchasing scheme. Although not the consensus, the percentage of market watchers now predicting that a further $10 billion will be cut has increased over the last week.
The trend for EUR/USD is still bullish, and the pair continues to make new highs not seen since November 2011, as it looks to continue its way towards the physiological 1.400 level.