Dollar opinion will stay weak. The simplicity in buck support amounts boost the odds that the markets attempt to trigger buck selling and will probably induce the dollar poorer and will fortify sentiment. The odds of ECB intervention nevertheless seem low in the brief term, particularly because there hasn't been a definite build up in short dollar positions, but concerns will begin to rise and verbal intervention might be stepped up to dissuade a fast movement towards 1.40.
The dollar has stayed on the defensive during the Christmas period and also the US currency dropped into a low of 1.3640 from the Euro throughout Monday. The dollar wasn't able to create any substantial comeback in Europe on Tuesday, trading near the 1.3620 amount before dipping to 1.3640.
There are marketplace concerns within the US budget and current accounts deficit places and this may leave the dollar exposed to selling pressure. The markets are effective in tripping option-related and stop-loss dollar selling and there'll be a temptation.
The remarks from authorities will be carefully watched in the brief term. Expectation of intervention have faded after the remarks out of Dutch Finance Minister Zalm who said that the Euro had valued within limits. There'll be a variety of opinion within Europe and there'll definitely be more critical issues when the Euro pushes over the 1.40 degree. The odds of succeeding will be reduced without US capital and the ministers in February could turn into a market focus sooner than would be anticipated whether there are steps to encourage the 40, to see.
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