EUR Trading Outlook
EUR/USD A tight range held in Europe and the pair sat near 1.2435 towards NY's open after drifting lower from the 1.2445/50 area. Early NY saw a quick dive near 1.2400 after the above f/c US GDP lifted US bond yields as well as the USD. Fast money and intra-day names were the noted buyers and there was little downside follow through. US yield gave up some gains and EUR/USD began clawing back some losses. The lift's pace increased as short covering in EUR (EUR//AUD noted buys) saw stops above 1.2445 run. Another leg up ensued after US consumer confidence came in below f/c and US bond yields gave up post-GDP gains. EUR/USD pierced the 200-HMA and hit a 1.2487 high. Only a small pullback was seen as the pair spent the afternoon consolidating just below the 200-HMA. Traders now look to the large amount of US data due tomorrow. Should the result show good econ growth it's likely EUR/USD get tapped lower. A return towards 1.2350/60 support might then ensue.
EUR/USD The pair's inability to break the key 1.2350 level in Asia elicited broad base short covering in Europe & NY. EUR/USD saw a steady rise in early Europe & sat just above 1.2400 as NY got going. The pair ignored USD/JPY's spike above 118.00 and was instead driven more by EUR/JPY's rise above 147.30 and serious short covering rallies in EUR/AUD, EUR/CAD & EUR/NZD. NY saw a steady rise and solid offers in the 1.2420/40 region were cleared with the pair eventually reaching a 1.2445 high. Little pullback from that high was seen as a solid two year US note auction weigh on treasury yields. This had EUR/USD near 1.2435 late in the day. With the second attempt to clear 1.2350 failing, the risk of a double bottom grows as a short market starts to lighten up ahead of the US holiday later this week. There is little major data overnight that might affect the pair so the market likely will wait for US Q3 GDP and Nov consumer confidence. It's likely a big upside surprise will be needed to see bears make a third attempt at 1.2350. If it does break it likely means a resumption of the longer-term down trend.
EUR/USD was broadly crushed in Europe's morning after ECB Chief Draghi showed deepening concern over price stability. EUR/USD dived from 1.2553 to 1.2415 before bouncing ever so slightly into NY's open. Early NY saw a lift to hourly resistance near 1.2440 but bears were waiting and the pair slid again before pausing briefly ahead of 1.2400. The drop resumed as EUR/JPY added to overnight losses once the pair broke cleanly below 146.30. EUR/USD took out 1.2395/00 support and ran stops. A low of 1.2375 was then hit. A bit of late day profit taking from USD longs allowed the pair a bounce towards 1.2390 and the pair sat there towards the close. The pair couldn't hold above the 10 & 21-DMAs and a bearish engulfing candle formed on the weekly charts. This suggests the long-term bear trend is close to resuming. A break below 1.2350/60 will confirm that view. Bears then target the mid to late Aug 2012 lows near 1.2240/95 initially. A break there puts the 2012 low at 1.2042 in play.The US has a large line up of data risks next week. If results are upbeat EUR/USD should trade heavy again.
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