The EURUSD pair continues to consolidate and range over the last 24 hours. We are at the last days of the month and hence it is likely that the trades and the price action are dominated by the flows. This is something that we have been pointing to, over the last couple of days, and yesterday we saw some choppy trading with the prices moving up and down.
EURUSD Affected by Monthly Flows
There was a period when the prices moved below the 1.24 region but it found some support in the 1.2380 region and this helped the pair to bounce back and now it trades comfortably above the 1.24 region once again. Not much has changed fundamentally over the last few days and though the stock markets have fallen, the currency markets seem to have lost touch with the stocks and seem to be having their own direction.
This shows that the price action has more to do with flows rather than anything fundamental or the economic data. This is likely to continue for the day today as well when the option expiries are also expected to come into play. We are also being exposed to the month end flows and the payments that happen between the UK and the Eurozone and this is also likely to have a say in which the market moves in. The traders should take these moves with a pinch of salt and not get carried away with the feeling that this is the prevailing trend.
Looking ahead to the rest of the day, we have the inflation data from the Eurozone and we also have the FOMC meeting minutes much later in the day. The minutes are not expected to add anything new to the market and it is likely that it is a repetition of more of the same and hence unlikely to move the markets by much. The inflation data could have sort sort of a day in how the euro moves and this coupled with the month end flows could carry the EURUSD pair towards the 1.25 region during the course of the day today.
This article was originally posted on FX Empire