Euro Halts Two-Day Advance as Traders Eye Barriers at $1.1850

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Written by
Stefania Spezzati
Written by

Stefania Spezzati

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(Bloomberg) -- The euro fell for the first time in three days versus the dollar as traders refrained from adding fresh long positions ahead of barriers at $1.1850.

Europe's shared currency stayed lower after data showed euro-area gross domestic product rose 0.6 percent in the second quarter, after increasing 0.5 percent in the first three months of the year. Barriers in the euro-dollar pair are seen at $1.1850, according to a London-based trader who asked not to be identified because the person isn't allowed to speak publicly. The flows are light amid summer break in Europe, he added.

Real-money accounts have been taking profit on their long euro positions after buying non-stop in the past few weeks, according to a trader at a hedge fund in the Middle East, who asked not to be identified as the person was not allowed to speak publicly.

EUR/USD -0.3% to 1.1812, after climbing to 1.1846 Monday, the highest level since January 2015
- The prospects of the European Central Bank attempting to downplay expectations of hawkish quantitative-easing tapering have risen, said ING Groep NV strategists including Petr Krpata as the euro broke above the psychological level at $1.1800
- For UniCredit, the dynamics argue in favor of further euro appreciation toward its year-end target of 1.20 and 1.25 by the end of 2018
- Societe Generale said a EUR/USD overshoot to 1.20 is still in sight for this summer, and the full bullish impact on the skew has yet to be seen. The bank recommends to go long EUR/USD 1-year corridor volatility swap with range 1.16-1.20 at 6.9 (vs 8.1 for the standard vol swap)
The Swiss franc gained for the first time in six days versus the euro, after touching 1.14550 on Monday, its weakest level since January 2015
EUR/CHF -0.3% to 1.14105
- JPMorgan Chase & Co. strategists refrained from becoming too dovish on Swiss National Bank and recommended not to chase the Swiss franc, continuing to prefer to fund euro longs through U.S. dollar and Japanese yen
- Large fundamental, surpluses, stretched balance sheet, the apparent tapering intervention and positive cyclical exposure to recent euro zone strength are among the reasons for the U.S. bank not to chase the Swiss weakness
- The pound is little changed against the dollar as traders await the Bank of England policy decision on Aug. 3; only three of 55 economists in a Bloomberg survey forecast a rate increase
- Australia's dollar trades lower into London session after RBA stepped up currency rhetoric while keeping its policy rate at a record low