EUR posting gains across the board
We can see that the EUR is one of the strongest currencies this morning, and many will be scratching their heads as to why this should be the case given the weakness in the Eurozone and a dovish ECB. Positioning is the short answer, and with the market having been short for some considerable time, we have to assume there will be some periodic short squeezes from time to time, with real money flow - people who actually need to buy EUR's for transactional purposes also impacting in thin, quiet markets.
Let's not forget that as weak as the Eurozone is, Europe still produces a significant volume of goods and these need to be bought in EUR's. So from time to time, we will see EUR gains - as modest as they may be.
For now, we are looking at resistance in the 1.1315-25 area, so we expect to see EUR/USD struggle in this area.
EUR/JPY buying in Asia is also said to have pushed the spot rate higher, with EUR/GBP also pushing against the resistance seen in the mid 0.8600's while EUR/CHF is trying to make new ground through 1.1300.
Friday price action can be erratic and after a week when tight ranges suggest limited interest, these flows can have an influence.
As regards the fundamental backdrop, nothing has changed, so today may be one to watch rather than anything else.