EUR Trading Outlook
EUR/USD Europe lifted EUR across the board after EZ PMIs came in better than forecast. EUR/USD was lifted from below 1.3440 to a 1.3485 high before slipping back near 1.3470 into NY's open. Better than f/c US weekly claims data put the USD and US yields on firm footings. EUR/USD dipped to 1.3458 but further losses weren't in the cards. Short squeezes in EUR/GBP (0.7889-0.7939) and EUR/AUD (1.4215-1.4312) combined with JPY weakness in EUR/JPY (136.37-137.19) to push EUR/USD back towards 1.3470 late in the day. Japanese CPI for June and German IFO for July are the big econ risk factors overnight. Particular attention will be placed on the German data as the market looks to see if the Russia/Ukraine situation has impacted business sentiment. Should the data be benign traders may look at techs that are flashing some s-t warning s for bulls. Risks may be to the topside as traders may cut back shorts heading into the weekend.
EUR/USD The pair held near its new trend low for most of NY and Europe. Bids ahead of the 1.3450 barrier and a solid bounce in EUR/GBP prevented bears from pushing further. EUR sales vs. the commodity currencies kept what meager EUR/USD rallies there were to a high of 1.3474. Late in the day the pair sat just above the day's low as the market's focus turns to EZ July PMIs tomorrow. Particular attention is likely to be put on Germany as the market looks to see the sanctions imposed on Russia have negatively affected one of the EZ's core economies. Should the PMIs disappoint, the 1.3450 barrier is likely to be cleared and stop below it run. Bears then will push towards more barriers reported at 1.3400. Longer-term bears are targeting sub-1.3300 levels for now.
EUR/USD The attempt to breech 1.3550/75 resistance in Asia failed and Europe pressured EUR/USD lower during a session that saw relatively quite trade. the pair sat near 1.3520 as NY got going. Bear in NY managed to push a bit lower as a 1.3513 low was hit early. The downing of the Malaysia Airline jet from last week seems to be getting more market attention and traders begin to think EUR will not be a safe haven should the situation escalate further. This helped keep EUR/USD from mounting much of a rally off the lows & it sat just above 1.3520 late in the day. Traders will continue to monitor geopolitical risks but have data risk on the horizon. US CPI is due tomorrow. Forecasts call for little change from the previous result but traders are fearful to a topside surprise. An above f/c result should send the EUR/USD down as traders will then expect Fed rate hikes sooner than later. should the data come in well above expectations it's likely the Feb low near 1.3475/80 will be broken. A sustained move below that support likely sees a quick run to sub-1.3300 levels as market chatter suggests traders don't have large short positions on the books.
EUR/USD A quiet overnight session quickly erupted into a bearish frenzy. After sitting in a tight near-20 pips range EUR/USD dived in early NY. The action seemed ignited by a double shot of bad news out of the EZ. Belgium consumer confidence hit the lowest reading in 11 months as came in at -10 (prv -7) and Bank of Italy lowered 2014 GDP estimates to 0.2% from 0.7% "with risks to the downside". EUR/USD filled the sov bids into 1.3500 and cleared the 1.35 barrier. It quickly hit a low of 1.3491. Bears couldn't push further though as profit taking from a market already short stemmed the slide. A quick bounce back above 1.3500 ensued and the bounce persisted as risk sentiment improved and stock market s rallied. EUR/USD briefly traded above 1.3530 before pulling back near 1.3525 late in the day. Bears face some risks now. The TL off the 2012 low was pierced but losses below it couldn't be sustained, a doji forms on the daily candle while RSI diverges on the new trend low. while the l-t trend is bearish a short squeeze cannot be ruled out. A test of 1.3610/30 resistance cannot be ruled out.
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