Over the past few days, the EUR/USD pair kept steady at the 1.21 zone. Already last Thursday, the USD made a substantial comeback on the strong US initial claims release falling to 328.000 in the week of April 3. Over the prolonged weekend the situation in Iraq seems to have become worse, as the news of hostages being taken (or released) seemed to come every hour with US, Japanese, Chinese and Russian hostages a.o., but the cease-fire at Fallujah seems to have calmed at least some nerves on the FX market, as the dollar didn't fall on all the news flow concerning hostages.
Yesterday US Treasury Secretary Snow said that inflation should remain moderate for some time to come, in part because of competition from overseas is restraining US business from boosting prices. These dovish comments however did not seem to influence FX market as of course he is a politician, not a Fed member. This morning, the EUR/USD pair stayed stable just below the 1.21 mark.
This is still a range trading environment then for EUR/USD between the 1.24 zone and the 1.1980 area, but the euro seems to be sold on upswings, or rather dollar bought on dips, as a strategy after the better than expected payrolls now 10 days ago.
ČSOB Investment Research