EUR/USD break below 1.2900 would strengthen the idea that a top is in place (Córdoba) – The euro area flash PMI was poor and the details even worse, and “the continued weak data can only raise expectations that with the OMT waiting for a formal request (hello, Mr.Rajoy?), the ECB will turn its attention to the economy and the transmission mechanism, and deliver another cut in the refi rate to 50 bp from 75 bp”, said the BBH analyst team.

“The euro, which was already trading heavily, though within last Friday’s trading range, broke down. Yesterday it briefly dipped through the $1.30 level, and while it finished the North American session above there, it did close below its 5-day moving average for the first time since August 30”, they commented. “A break of the $1.2900-20 area would strengthen the idea that an important top is in place”.

Additionally, they commented that the price action is broadly consistent with what we have seen following the announcement of QE2 back in Nov 2010, “where the dollar weakened initially and then recovered smartly”.


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