In the Nov.18th post I referred to 1,05 as a potential level from which EUR/USD could bounce … and it did nicely 2 times since then as you can see on the chart below.
The italian No-vote to constitutional reforms was widely anticipated and the EUR was too oversold before the vote to trigger stop losses below 1,0450-1,05. The 2 Years long 1,0450-1,16 range remains in place.
The main trend is still down but short term upside to 1,0850 and 1,10 is likely. Expect some volatility tomorrow around the ECB meeting ; unhedge positions (EUR based investors – leave USD « open ») if cross trades in the abovementionned range. USD Investors : ReHedge EUR in same range.