Citi…Spot EUR: London Open: FXWW

From the FXWW Chatroom – The theme of the day is bounceback. EUR tested lower overnight but stopped around the inflection point at 1.1580 and bounced right back in everyone’s face. It feels like the position is a bit vulnerable as GBP rallies on positive Brexit headlines and drags EURUSD with it. In fact, we saw more participation on the way back up yesterday than on the way down early in the session, which tells me that the market is not comfortable being short in the low 1.15s.
German ZEW is coming up this morning at 10am which is the big event of the day but the Thursday ECB meeting is the big event. Talking to our options desk, there is about 50 bps priced for the presser, which feels like a lot for a meeting which should be a snooze and a low vol environment.
I am still leaning short Euro against the 1.1630-50 region which has been good resistance a number of times. I think that the strong US data will continue to dominate the conversation and the ECB will be dovish ahead of the Italian budget, trade talks with the US and the EM blowup.
Support: 1.1580 (key inflection), 1.1530-00 (big support zone), and 1.1445 (neckline from inverted H&S at the lows)
Resistance: 1.1630-50 (key resistance region) and 1.1730 (end of August highs)

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