I might have missed something, but most of the news I’m hearing out of Europe is not of the good variety; Greece is broke, and Ireland’s in trouble as are Spain and Portugal. Nevertheless the EUR keeps rising so that is telling us something.
EUR/USD is 20 pips off monthly highs, EUR/GBP has broken out of a medium term downtrend, EUR/JPY is readying to test important technical resistance and even the ‘un-buyables’ like EUR/CHF and EUR/AUD are threatening to turn neutral at least.
The only obvious explanation is the heavy buying by Asian central banks who’ve been buying USD/Asia and then diversify into EUR mainly. This is forcing the EUR higher which in turn forces short-covering on the crosses. As the old adage goes, the market can remain irrational for much longer that you can remain solvent so if you don’t understand it, don’t fight it. Take a break and come back refreshed when the market makes more sense.
