EUR/USD flows: Still leaning to unwind o/s conditions, better sellers seen above
Fractious w/e gives way to latest stand down and talks to resume
Mkt still leaning towards unwinding overbought dollar but limit seen to correction
Inflation data, period end, Lagarde later; payrolls on the radar
Quite a calm start to the week, FX largely drifting since the long dollar overbought correction at the end of last week, extending that move slightly. EUR/USD still unwinding oversold conditions running into 1.1400/10 resistance, with .50 above expected to cap, 1.15 max if it turns into a short-lived squeeze. Selling into any good recoveries is expected.
Markets able to take the breakout of military exchanges over the weekend in their stride as both sides agree to stand down and resume talks on Tuesday. Brent front month largely flat at +0.1%. Focus this week is on the quarter-end, and any position adjustments into that (in theory USD/JPY supportive), EZ inflation and the ECB conference that starts today, seeing Lagarde give a speech later. Payrolls is also looming Thursday which may help to keep commitment light until that is seen. Inflation data kicks off with Spanish data shortly, consensus looking for a slip back to 3.4% from 3.6% on HICP. EZ M3 data follows (mkt unchanged at 2.7%).