EUR/USD: Range Establishment Post 1.1250 Demand Imbalance

The absence of liquidity in financial markets during Monday is well expressed through the pair’s narrow 35p range. The most traded pair in the forex universe has validated the first up-cycle structure for weeks, even if from a 4h chart and above, it would still warrant caution as the structure is still a wide a 1 cent range between 1.1340–50 down to 1.1250 with 1.13 the anchoring midpoint to pivot from. At the moment, with back-to-back hourly rejections off this round number and a 25-HMA still exhibiting an upward slope, one could make the case for active interest to buy on dips as the hourly cycle pans out. In terms of intermarket flows, there is an absence of cues to be obtained from yield spreads or even the German yield as a proxy for the EU growth outlook as the moves have been extraordinarily stagnant in the last 24h. Even the 5-day correlation coefficients both show an evident detachment between the performance of yields and the EUR/USD price action, which results in a market that is temporarily technically-driven.