10 January 2012 at 7:18 GMT
Against a background of bearish signals for sentiment for this week, Asian trading saw new lows for EURUSD. These lows were not maintained however as buying interest/profit taking developed beneath 1.2700. The resulting rally has extended overnight and although this rally is likely to be temporary and intraday signals for sentiment are approaching overbought extremes, our call for this morning is cautiously Bullish while above 1.2736. The immediate objective is 1.2815, Friday’s high point, with a move beyond that level exposing sentiment to 1.2866, half of last Thursday’s losses, or even towards, but probably not as far as, that day’s 1.2947 peak.
The risk to this call is that the improvement from Monday’s low was more temporary and limited than currently assessed and this would be signalled by a move below 1.2736. Prices and sentiment should then fall to 1.2696, this week's open, then yesterday's 1.2666 low.
