DislikedEUR/USD: Market Suggests U.S Bad News Factored, We Have Doubts. London, July 30. Seems like we have been here so many times before you think the market would learn. There is clearly an air of optimism over the Dollar"s fate following yesterday"s rebound in U.S consumer confidence and the resulting rally in U.S stocks and all of a sudden the bad news emanating from the States has been fully factored. Granted the stars appear to be better aligned with oil coming clear off its record highs and fresh associated optimism over inflation. However, nobody wants to be the last to trade into a more sustained Dollar recovery and as such the positive vibes are now reverberating around the broader market to the point where potential bad news is being discounted. Note we still have U.S GDP and the labour report to come this week and the banking world remains as fragile as ever.
EUR/USD sank to 1.5555 last session having peaked at 1.5770 the day before. Early Wednesday price action suggests the market is not totally convinced of the Dollar"s newfound popularity and that Tuesday"s performance might bring a bout of consolidation at best or even a tentative recovery in the EUR today. We see risk of a gradual climb back to the 100-day MA line, today at 1.5665, but favour consolidation between 1.5560 and 1.5620.Ignored