EUR/USD Supported By Global Risk Markets- For Now

Eur/Usd looks to be supported by strong trade in equity (risk) markets, and strong trade in the commodity (demand) markets. However, there are now major questions regarding the EU bailouts, and major concerns that a stronger euro will impede the ability of the Euro-zone to balance its export book.

We will be looking for signals that sell euro lower on weak risk and demand markets, as and when that happens.

Problems for Eur/Usd started in the bond markets on Thursday, when the spread between the 10-year German and Greek bunds widened to 425 basis points, close to an 11-year high.

Theoretically, the spread should be small, hovering near zero, because both countries have the same monetary framework and share the same currency. These are major fundamental reasons to be ready for a technical short signal on Eur/Usd.

As the final session of the week draws to a close, the major pairs are battling very range-bound price action. In the last five sessions Eur/Usd is -70 pips, Gbp/Usd +40, Aud/Usd -40, Usd/Cad +10, Usd/Chf +15, Usd/Jpy -5.

A net +90 pips of movement, in favor of the Usd, in four trading sessions, spread over six pairs. The average of 15 pips per pair overall, equates to 4 pips per session, per pair. Tight ranges? For now, but get ready, a big break is never too far away.

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