Forex Market Update: Euro-Dollar (EUR/USD) Breaks Above 1.4200

EUR/USD successfully cleared 1.4200 as European interest were good early sellers of the USD. The move over 1.4200 boosted interest for short dated EUR calls, with interest dealing in the 1.4300-1.4400 corridor for the latter part of the week. Some names have been pricing in the risk of a move above 1.4500 as the dollar tone turns very bearish amid hopes of a global economic recovery. Appetite for EUR calls has seen the premium over ATM straddles steepen to 1.25% in the front end. Today’s N.Y. cut sees a slew of 1.4200 strikes, which should underpin in thin European trade. There is some speculation of Asian fund selling and corporate related offers from 1.4210-30, but momentum remains with the topside. The break of key technical levels just ahead of 1.4200 support a run on late December levels above 1.4350 and some are projecting potential for a move on 1.4700 over the next week or so.