Friday, March 25, 2011

Last minute USD short covering

* 25 Mar 11: 16:55(LDN) - FX NOW! EUR/USD, USD/JPY Flows - Last minute USD short covering made difficult by Plosser

USD's gradual rate of appreciation into Friday's close, which was fuelled most by dealers squaring positions in advance of the weekend, has accelerated in reaction to another Fed officials comments. Phil Fed's Plosser has made the simple observation that the Fed will need to tighten policy "soon". EUR/USD moved down through the 1.4100 level, where the sovereigns that were noted earlier have apparently gone home for the day/week. USD/JPY jumped up to highs of 81.45-50 and if it goes further the buyers will probably be making a number of exporters very happy. While the moves are dramatic, on the day, the extent of the moves are due mostly to the limited liquidity that is always the case in late Friday trading. Watch for technical support on EUR/USD at 1.4052 and resistance on USD/JPY up at 82.03. M.B.