EUR/USD: Likely to stick around 1.2500 until the ECB on Thursday

FXWW

By: Sean Lee

Thanks to some of our institutional friends yesterday in the FXWW chatroom, we discovered that there are some very large expiries in EUR/USD at 1.2500 over the next few days. This will most likely keep the pair stuck within 50/70 pips either side until the ECB statement on Thursday.

The speculative market is very short of EUR and very bearish, but if the ECB comes out with a dovish statement then we will probably see big Sovereign reserve managers start to sell EUR in size. This is the stand-off we are having at the moment. If the ECB is neutral, then the speccy shorts will start covering aggressively.

So EUR/USD sideways until Thursday and then sharp movements one way or the other.

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FXWW

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