EUR/USD must hold the early October low of 1.0448 to avert a deeper drop – SocGen

The GBP/USD pair attracts some sellers to around 1.3310 during the early European session on Wednesday. Escalating conflict in the Middle East triggers a "flight to safety," supporting the US Dollar against the Pound Sterling. Traders will take more cues from the US ADP Employment and ISM Services Purchasing Managers Index reports, which are due later on Wednesday. 

The volatility regime itself is also changing character. EM carry trades thrive in calm markets. They suffocate in environments that resemble Buckaroo Banzai trading conditions, where headlines move faster than models. That is exactly the world investors are now trying to recalibrate to. Euro rate volatility had been remarkably subdued even while equities were wobbling. That stability is now being questioned, and once volatility leaks into rates it rarely stays contained. Indeed, carry trades love calm seas. War turns the ocean into white water.