European Equity Markets Rise As The Dollar Falls

Good morning. Well as if to prove my point yesterday regarding taking anything for granted in this market the price did flip 1.31-1.32 yet again.

The USD, which had been doing rather well, got sold across the board because risk and equities said that it should. Just to let you know, if you were in any doubt, that the same boring dynamics are definitely still in place. It would appear that the equity markets led the bond and currency markets yesterday.

Whilst I don’t think the EUR was really as wanted as the price action would suggest yesterday, I do think it was the dollar that really left it little option but to rise, because of gains elsewhere versus the greenback.

Honestly I had a horrid day trading yesterday; my worst for some months, as I did that old impression of Canute on the beach, not a great idea at the best of times and especially more so these days where it’s mostly robots that you’re up against, and they don’t have any emotion whatsoever.

What was really surprising about yesterday’s price action was the fact that EURUSD broke above the previous day’s high at 1.3214 and only traded as high as 1.3219 before it stalled again. That was a sure sign to me that the move was all about stop loss removal.

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The move higher in equities helped commodity currencies and metals. The pound rallied after had earlier been sold aggressively versus the EUR. Therefore EURGBP fell back from earlier highs around 0.8345 as GBPUSD lifted above strong resistance around 1.5790-1.5800.

That area was the top of the cloud on the ichi moko chart. The break there saw the price move as far as 1.5883 just after the 4pm London fix, so I would assume there was a large buy order for that event yesterday.

Following yesterday’s equity market rallies around the world Asia is all in the green again and that did help European equities earlier this morning and it will be equity markets that most likely act as the overall driver for risk, bonds and currencies again today.

The fact that the European equity markets are now slipping is one reason why the EURUSD is testing that cloud base at 1.3115 as I conclude this update, falling back from earlier highs near 1.3195, to trade under the interim support at 1.3145.

There is talk of large Asian CB sellers this morning from the highs. That’s the information that I have been told.

On a lighter note, I would just like to let you all know that today is officially groundhog day for whatever that is worth.