EUR Trading Outlook
EUR/USD The ECJ ruling on the OMT program sank EUR/USD in Europe's morning to hit a low of 1.1728. Short covering had it near 1.1760 into NY's open and just slightly highs into retail sales. The big miss and downward revisions to prior sales data sent US bond yields and the USD tumbling. EUR/USD spiked up to a 1.1846 high. Offers into the 200-HMA and hourly highs near 1.1850/60 prevented further gains. The USD's slid abated and the losses began to erode. EUR/USD slide from the highs and filled the post-data gap. Little bounce was seen though as the USD firmed in the afternoon and the pair sat just above 1.1775 late in the day. There are some short squeeze risks as a doji has formed after the new low was set, daily RSI diverged and yield spreads narrow a bit. However the long-term trend remains down and the market looks to fade rallies. Sellers are touted in the 1.1870/00 region for now.
EUR/USD The EUR was broadly offered against the majors today. This saw EUR/USD trade heavy and threaten the 1.1750 level but it was unable to do so. IT held to a 1.1753/1.1800 range for NY and it sat nearer to the low end late in the day. The pair was unable to break the tight range as it was buffeted by EUR/JPY's dive from 140.50 to 138.44 and USD/JPY's dip below 117.60. However, with EUR so well offered across the board it's likely EUR/USD will clear the 1.1750 soon as rallies have been meager and those looking to fade them have had no real chances to do so. Should the level break it's likely a new bear leg begins and the pair then makes its run at the June 2010 low near 1.1640.
EUR/USD Tight ranges held in Europe and the pair sat just below 1.1820 hourly resistance into the US jobs report. Wild swings ensued after the release. The above f/c NFP saw the pair spike down initially but the average hourly earnings miss was noted and the pair bounced towards 1.1830. Sellers emerged and a trip down to 1.1762 was made. Further losses couldn't be made though. The front of the of the US yield market saw rates tumble. This sent the USD broadly lower. EUR/USD lifted again. The pace of the rise accelerated as USD/JPY crashed through 118.75/80 support. EUR/USD took out the post-data reaction high and eventually made a 1.1846 high. Offers into s-t res near 1.1850/60 capped the gains but little pullback was seen as the pair sat just below the lows late in the day. There is some risk bears might get squeezed. RSIs are deeply oversold and yield spreads are narrowing a bit. Should 1.1860 get cleared stops likely get run. The 1.1895/00 level is then targeted followed by 1.1969/1.2006 where the highs of Jan 6 & 5 as well as the 21-DMA sit.
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