EUR Trading Outlook
EUR/USD A brief lift in early Europe saw the pair bounce off support near 1.3520 and touch 1.3540. Bears were lurking though and pushed the pair back below 1.3530 into NY's open. US data was mixed with jobless claims improving but housing and permits data deteriorated. US yields and the USD turned heavy. EUR/USD got very little benefit though as it hardly moved back above 1.3530 before resuming its steady slide. The pair then hit a new s-t trend low (1.3516) after the Malaysia jet downing increased risk-off sentiment. EUR/JPY's slide from above 137.40 towards 136.90 aided EUR/USD in hitting the new low. Bears couldn't press their case further though as the mkt needs to digest the Ukraine issue further and solid bids remain into 1.3500. A small bounce had the pair near 1.3525 late in the day. A light data calendar overnight may see action limited again. S-T risks are likely skewed to the topside as short covering into the weekend may be the theme over the next session. The long-term trend remains bearish.
EUR/USD Europe's bears pressed EUR/USD lower through their morning. EUR sales inspired mostly by EUR/GBP selling after UK jobs initiated EUR/USD's slide. Selling began near the 1.3570 area and continued into NY's open where the pair sat just below 1.3540. The June PPI was above f/c and the USD and US bond yields got a bid as mkt fears of earlier than anticipated rate hikes grew. EUR/USD slipped to 1.3525. A bounce ensued as US yields slipped a bit. Softer than f/c IP and cpacity rates for June aided to soften yields and the USD. EUR/USD touched 1.3540 but sellers emerged. A steady decline took hold, aided by EUR sales vs. AUD & CAD, and the pair sat just above the day's 1.3521 low late in the day. Bears now look to EZ & US data tom for further help. EZ June CPI is due & the US gives us weekly claims data as well as June building permits & housing starts data. Should CPI come in soft & the US data reflect recent upbeat US data EUR/USD is likely to test the 1.3475/1.3505 support zone. A break of that area likely accelerates the recent slide. Bears then target Nov's low (1.3295) then Sep's low (1.3105).
EUR/USD A disappointing ZEW report and a renewed slide in Portugal's BES shares saw Europe drive EUR/USD lower. The pair was driven down from the 1.3628 high and back below the 21-DMA. It hit 1.3587 before bouncing towards 1.3605 into NY's open. Early NY saw a lift to 1.3620 after the headline US retail sales number missed estimates. The lift began to fade after traders delved deeper into the data and decided it wasn't all that bad. A dip near 1.3590 ensued and the pair sat just above that level into Yellen's testimony. The Chairwoman's prepared text noted that high accommodation is still appropriate. US yields and the USD slid. EUR/USD spiked to 1.3612 but the gains quickly reversed. The Q&A session had a bit of a hawkish tilt to it. The USD and yields lifted again and EUR/USD quickly slid lower. A low of 1.3562 was hit. Very little bounce was seen even as US yields gave back some gains and stocks were firm. The pair sat near 1.3565 late in the day as the market may now be thinking that US yields will be rising sooner than anticipated and the ECB will be easy. A 1.3500 test may come soon.
EUR/USD Short squeezes in EUR vs. JPY & GBP spiked EUR/USD to 1.3640 in Europe's morning. Solid offering interest into 1.3650 prevented further gains and the pair slid towards 1.3625 as NY got going. The USD was firm for the most part in NY as US bond yields continued their bounce from last week's lows. Early NY saw a push towards 1.3615 before a bounce had it back near 1.3630. Yield spreads edged further in USD's favor and the bounce faltered. The drift lower resumed and pressure was added by the IMF. The organization stated the ECB should use QE if inflation stays low. Further pressure came from Draghi himself as he echoed recent dovish comments. He noted appreciated FX rate is a risk to a sustained recovery as well as stating accommodation will remain high. EUR/USD dipped near 1.3805 before lifting back near 1.3620 late in the day. Trades now await Yellen's testimony tomorrow. She's unlikely to give any hawkish tips in her prepared remarks. The Q&A might be tougher for her as she's likely to be pressed on rates due to recently improved US econ data. Hawkish tips during the Q&A may see 1.3475/00 break
EUR/USD Short covering from the July 10 sell-off saw EUR/USD pushed up to the 200-HMA in Europe's morning. The quieting of the Banco Espirito Santo issue seemed to be the main driver for the gains. Offers at the MA and just above stalled the rally and the pair slid towards 1.3600 as NY got going. NY pushed the pair to a low of 1.3592 with no further losses possible after that. With no data to spark a move and the Fed speakers not breaking any new ground there was little reason for the market to push too far in either direction. The pair lifted off the lows and sat just below 1.3610 late in the day. Bears have been relatively patient as the pair continues to consolidate losses from the May drop but may be rewarded soon. The US has retail sales, PPI, IP and housing data next week. should results come in above forecasts the mkt may up the chances the Fed hikes rates sooner than later. US yields and the USD would then lift. EUR/USD might get a chance to break 1.3475/00 support. If broken a quick move to sub-1.3300 levels is likely as numerous techs supports will be broken. Beyond 1.3300 l-t bears will target 1.3000 & 1.2740/60 supports.
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