FX Commentary: EUR-USD
FX Action: EUR-USD shorts were squeezed following German GDP data, which indicated a decline of 0.5% q/q in Q2, which was not as weak as expected. Early European traders tried to force the issue at 1.4850, but good demand was noted from Asian and Eastern European accounts, which lifted the pair up to 1.4900 and then filling trailing stops up to 1.4920. Sellers are expected to remain on strength as the dollars benefits on increased focus on economic problems outside of the U.S. However, further gains will require fresh commodity market losses and an improvement in U.S. economic data. So far, this has not come to fruition, which may see the dollar rally stutter. Real money names have been net dollar buyers, but there are indications that some sovereign accounts are picking up cheap euros on dips. Notably, long standing 1.4800-1.6200 range binary options could be behind some of the flows. However, some sideways movement, albeit in a broad range, would not be surprising in light of the pace of the recent dollar correction.