The EU Summit to end all summits... for now...

I have deliberately sat on the sidelines for the last day or so, just enjoying the plethora of headlines, pundit commentary and general pontificating being done around today/tomorrow’s EU summit and what (if anything) the potential outcomes may mean for the EURUSD, the EU and life on this planet as we currently know it.
Net/net there is no one out there that has a clear clue about what this could actually mean for the near term and more importantly unless anyone has a direct line to the powers that be in Europe you’ve all got as much chance of getting this right as flying to the moon tomorrow.

I know it sounds cynical, even for me, but let’s be honest this market is now (and has been for quite some time) a political animal rather than a reflection of genuine economic rationale. Merkel has made it clear that she has no interest in continuing to be the uber back bone of Europe and defiantly stated only a day ago that “as long as she lives” she will not be party to Euro bonds, fiscal union etc. Well it depends on which life she’s actually referring to, does she mean her political life or her natural one? I dare say that her statements are now being made by way of political chest puffing rather than a genuine concern about the welfare of Europe and the EU as an entity. Nonetheless the market has taken all of this to heart and has discounted the outcome of this summit to its bare bones, meaning that no one expects anything of any substance to come out of this prolonged lunch soiree.

Alright enough soap box action, turning to the market. Europe is still deep in the proverbial and has now lost the final paddle it may have used to attempt to dig itself out. And yet the EURUSD, the (potentially) truest reflection of this sentiment, remains trapped between a rock and a hard place and while it should be considerably lower, it isn't! Having taken out a raft of stops sub the 1.2450 area first thing this morning, we have settled down for now and trade 1.2430 at the time of writing. The next line in the sand is 1.2380 and even more stops of a more sizeable nature reside below. On the topside offers and more offers come in at 1.2500/30 and the final hurdle is 1.2570. I’m sat on hands and refuse to ruin an otherwise decent H1 by getting involved in this noise over the next day or so.

On other crosses, well the AUDUSD is proving to be a little more resilient than some may have anticipated, but even so trades a narrow 1.0000 by 1.0130 range, looking for a lead (as most others are also) from the EURUSD as to its next move.

USDCAD is most definitely in paint drying mode as the commodity and energy complex take a small beating, but no one is prepared to dispense firmly with the USD. Obvious levels are 1.0180 downside with 1.0330 topside and roughly 30 points on a day somewhere in between.

The Cable for the time being is suffering at the hands of greater USD demand, but this should only last a little while longer. All in all the Sterling is for the most part quite a hearty beast and be it a function of the EURGBP (lower) or general inherent strength, I like to own Sterling rather than not. This translates to 1.5480 on the downside in the Cable, while 1.5630 should keep the topside contained until next week.

If I were to continue, I would simply be making stuff up today, for in truth we all sit and wait for more useless sound bites and headlines from the summit to end all summits.

Good luck folks and as always, helmets firmly on!