EUR/USD sank to fresh year lows yesterday morning just below the 1.19 mark, indicating the current ruling USD bullishness, as new facts had arisen to justify such a move. This morning, some small attempts were made to move back to the lows, but the pair couldn't break below the 1.19 mark. A new purported Bin Laden tape may be holding the USD back somewhat for now.
Over the next two days, data could remain USD friendly, thus perpetuating the current trend strategy of buying USD on dips and then looking for new EUR/USD intraday lows. Today, the market can take a look at NY and Philly Fed manufacturing surveys. Concerning the forex markets also the TIC data may be of some importance, like we have seen recently.
Tomorrow is another eventful day, with housing starts, industrial production and U. of Michigan consumer confidence.
The economic data over the past weeks have really altered the tone for the USD. The payrolls brought a clear and unmistakable schism, leading the EUR/USD pair down from the 1.24 zone at the time and out of a sideways trading pattern in place for some months. The USD has high and increasing hopes for a rate hike by the Fed altering its patient stance, pricing in ever closer rate hikes recently.
ČSOB - Investment Research