The EUR/USD pair only briefly dipped to the proximity of the year lows yesterday, going as far as the 1.2050 zone, but couldn't sustain a break and rebounded forcefully and gradually.
Obviously, to us, this signals the market players aren't ready to challenge the year lows yet. There has been a lot of speculation on a potential ECB rate cut this week, but when push comes to shove, will it really come true and thus is it still indicated to go on selling the euro in hope of such a rate cut.
So if the market isn't ready for a full blown test of the year lows, it is back to some kind of range trading: we envisage this range to be between 1.2050 and the 1.2460 area for now.
ČSOB - Investment Research