The EUR/USD pair yesterday couldn't sustain its break below the 1.20 threshold short-term and thus some profit-taking kicked in, bringing the EUR/USD pair above the 1.21 mark by the close of trading in the evening. There wasn't much other news to go by, so the rebound may be somewhat technically inspired. Approaching oversold levels below 1.20, after the strong downward movement, from 1.24 to 1.20 in 3 days, there may have been quite some incentives for profit taking by some market players. This morning, the currency pair already inched back below the 1.21 mark. If this is confirmed, this would fit the strategy of selling euro on upswings vis-a-vis the USD. This bias was installed this week for short-term trading purposes.
ČSOB Investment Research