EUR/USD: Range trading ahead of FOMC; sell-rally bias intraday
EUR/USD has jumped a long way in a short space of time, 900 pips actually from 1.2040 to 1.2937. I’m yet to be convinced that the market is comfortable being long EUR and that means that the EUR is always susceptible to sharp sell-offs on relatively minor news/statements. We are also nearing important technical resistance at 1.2935 (61.8% retracement of year’s high to year’s low) and that will make EUR bulls even more cautious.
The market is also unwilling to buy the USD at the moment on the back of more QE, and this is of course very understandable.
What about EUR/JPY then? The market is trying to force a risk-on play at the moment but as can be seen by the AUD, we are not in a full risk-on environment so this EUR/JPY buying could end in tears. It could be a case of buy-the-rumour-sell-the-fact.
Overall then I like the idea of selling intraday rallies with 1.2935 as topside resistance and 1.2820 as initial support. A break outside of this range will necessitate some reassessment.