EUR/USD: Sovereign buyers off-setting selling on the crosses
The market has been building longs in EUR/JPY and EUR/AUD over the past few months and we’ve seen big moves in both of these pairs. I think what we’ve seen in the past few sessions has been some aggressive profit taking on these longer term trades. There has been no sign of any major collapse in either pair but remember that the clever traders get out first and avoid the rush!
EUR/USD has slipped toward the lower end of recent ranges, trading just above 1.2920 yesterday, but the regular presence of Sovereign buyers has allowed it to bounce back above 1.3000. If this demand continues, and the crosses still come in for heavy profit taking, then the main pressure will be on USD/JPY, pushing it lower, and on cable and AUD/USD, pushing them higher.