The algo led jump in EURUSD on last night’s Asia open didn’t take long to retrace
EURUSD took a jump at the Asia open as the German SDP party managed to vote in the deal to form a coalition with Merkel & Co. On Friday, the K-man warned of the risk of a gap opening and he was bang on the money. It seems the market wasn’t pricing in too much risk though, as the 40 pip jump indicated. After that, the euro spent most of the session giving it all back to pretty much match the late Friday lows.
We still find ourselves stuck in a 1.22-1.23 range, and that should be our trading guide intraday.
I’m looking at the low risk trade of playing the edges with tight stops until something breaks. The US shutdown isn’t really having any effect on FX right now as the market has been here before but with the dollar still looking bearish in the bigger picture, it’s another brick in that wall. The yanks are supposed to be having another vote on a stop-gap bill so we’ll be eyes down for those headlines. Even if they do pass it, I’m not sure we’ll see too much reaction in the dollar as it will only be a temporary motion to give them time to continue arguing like school kids.