"The May downleg in EUR/USD looks to be giving way to more two-risks for the time being," Westpac says in a note. The house notes a series of key near-term events that could influence the pair including a G-7 conference call and Bernanke's testimony this week, as well as Greek elections, an FOMC meeting and an EU leaders council meeting later this month. "Bernanke's testimony and FOMC meeting will focus minds on the potential for more Fed easing while the EU leaders meeting will concentrate minds on the potential for a more comprehensive EU policy response," it says. "It remains to be seen whether policy can extinguish the downside risks... markets are very defensively positioned and vulnerable to even minor positives on the policy front," it adds. The house recently hit the trailing stop on the balance of its EUR/USD short position initiated on May 14. "We will look to re-short EUR/USD on any strength into the 1.27-1.28 zone." The EUR/USD is at 1.2529.
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