EUR/USD did find a strong bid in the 1.4260/80 area and the pair staged quite an impressive performance further out in the session. We consider the move mainly as a technical correction on the USD-strength at the end of last year.
Some cautious/ soft comments from the Fed (Bernanke/Kohn) on the US economy during the weekend might have played a role, too.The data didn’t provide much of an explanation for yesterday’s move. The final EMU PMI came out in line with expectations (and was after all far from spectacular at 51.6) while the US ISM for the manufacturing came out on the stronger side expectations and at a very lofty 55.9.
With respect to the latter, we thought that markets had reached the stage where US positive economic data might be considered as USD-supportive.
However, this was not really the case yesterday. To be honest, the EUR/USD reaction (and the reaction of the currency markets in general) to this ISM release was (again) very subdued.
The pair came temporary off from highs at around 1.4450 and settled in the lower 1.44 area. Looking at the price action in EUR/USD, one could argue that markets were again/still playing the risk theme at the start of the new year.
