Forex Market Update: EUR/USD Takes Out Stops and Options on Trichet Comments

The EUR-USD moves dictated the trading action in Asia today with the EUR-USD plunging through stops at 1.3000 and 1.2970, and dragging AUD, NZD, GBP and CAD all lower in the process. The catalyst could easily have been just to target the stops, but comments from ECB’s Trichet over the weekend, suggesting the possibility of a May 25 bp ECB rate cut and other easing measures also helped to fuel the selling. EUR-USD dropped from highs of 1.3049 to lows of 1.2966. The large slide in EUR-JPY on the back of the EUR weakness, also helped weigh on USD-JPY and JPY crosses with USD-JPY falling from 99.41 to lows of 98.63. Asian stocks were mixed today. U.S. treasury yields retreated after strong gains on Friday in NY.