Yesterday was a quiet day for the large part as there was not much to move the market in any specific direction. A large part of the Asian and European session was dominated by flows and we saw the Euro going down below 1.1200 and testing the lows from yesterday but it did bounce back from there and then made its way slowly back above 1.1200. After that, it was just consolidation and more consolidation as the market waited for comments from Fed’s Yellen and ECB’s Draghi later on in the US session. There were also large option expiries at 1.1200 and 1.1205 and these usually tend to control the price movements if the current market prices are near them.
The market was waiting to listen to some clues on where the US economy was headed and what it would take for the rates to be hiked. The earliest that the rates can be hiked is December and the market was tuned to Yellen saying something to that effect. But Yellen failed to add anything to that and in fact, did not even refer to any monetary or economic policy. This disappointed the markets and if that wasnt enough, out came the crude oil inventory at a disappointing -1.9M when the expected was 2.4M. This dampened the mood across the stock markets and it strengthened the USD to an extent due to the risk-off mood. So, we saw this pair drop back below 1.1200 to the bottom of the days range and it continued to consolidate there.
Then came the surprise package of the day, an announcement of a deal in the oil producers meet in Algiers. A deal in which the producers agreed to cut the production in order to increase and support the oil prices. This led to a general risk-on environment and caused a selling of a lot of yen but EURUSD continued to show no interest in the happenings and the highest was 1.1232 post the announcement. It sits at 1.1227 as we write this and the range between 1.1190 and 1.1250 continues for today as well. Unless there is a range break, we should only see more consolidation today.
There is no major news from the Euro region today with the GDP figures from the US to be released later on, closer to the US session.
