EUR Trading Outlook
EUR/USD The pair held to a relatively tight range as it consolidated recent losses ahead of key data risk. Europe pushed EUR/USD lower from just above 1.3400 towards 1.3385 into NY's open. Firm US bond yields o/n pressed the USD higher to aid the pair's dip. Early NY saw further upside in yields & EUR/USD dipped to 1.3372. Jobless claims were higher than f/c but the prior release saw a nice revision while Q2 Employment Cost came in at 0.7% vs. expected 0.5%. The data helped the pair to the day's low. Bears couldn't push further as a mkt well short of EUR looked to cover pre-NFP. A slight lift took hold & the PMI miss gave a boost. US yields & the USD slid off the PMI miss & EUR/USD tested 1.3400 again. A small pullback had the pair near 1.3390 late in the day. Traders now await the US jobs report. Should the report be upbeat, US yields should resume their recent rise & take the USD along with them. A solid jobs report diminishes the Fed's tip Wednesday regarding labor slack. A good jobs report likely sees EUR/USD bears gun for the weekly cloud base & Nov low (1.3317 & 1.3295 respectively).
EUR/USD Steady bullish USD pressure saw Europe crack the 1.3400 barrier. Downside follow through was limited as the pair bounced off 1.3394 and sat near 1.3400 into NY's open. Tight ranges held even after ADP's miss saw only a limited lift. GDP's big upside surprise woke the mkt from its nap and EUR/USD dived lower. 1.3667 was hit before light position squaring pre-Fed had the pair near 1.3380 into the Fed decision. Post-Fed saw algos go wild. The pair spiked to a new trend low of 1.3366 (aligns near the 50% Fib of 1.2740-1.3395) as the Fed made note of inflation's likelihood of running persistently below 2% has 'diminished somewhat'. Those losses were erased quickly as the the Fed also noted labor mkt slack and that they would remain accommodative. A short covering bounce lifted the pair to 1.3405. US yields didn't give back much of their gains though and the pair slipped towards 1.3390 late in the day. Jobless claims, Chicago PMI and NFP are the next catalysts. Bulls need further robust US data for a break of the 50% Fib and test of the weekly cloud base & Nov low (1.3317 & 1.3295).
EUR/USD An early rise in Europe was rebuffed at 1.3444 as Asian & spec offers touted near 1.3450 kept bulls from pushing too hard. A slip from the day's high had the pair near 1.3435 as NY got going. US yields were on the soft side but USD strength permeated the mkt. The pair slid right out of the gate and broke the overnight low. Helping the slide was Moody's downgrade of Deutsche Bank's senior debt & deposit ratings. USD/JPY's break above 102.00 emboldened USD bulls and EUR/USD slid towards 1.3410. A slight bounce towards 1.3420 was rebuffed as new sanctions on Russia from the EU were announced. A low of 1.3404 was hit but the 1.3400 barrier protective bids only provided a minimal bounce. This is likely to make defense of the barrier difficult as those protecting the barrier have had little chance to sell the EUR/USD bought to defend. If no serious bounce is encountered soon specs looking to fade a rally might come to market ahead of the key US event & data risk due the rest of this week. Large stops are touted sub-1.3400 and if run the door to the Nov low at 1.3295 opens.
EUR/USD NY saw tight ranges carry over form the overnight session. The pair did have a tint of short covering added to it as specs lightened up ahead of big event and data risk due later in the week. Short covering in NY saw the pair trade from 1.3430 to a high of 1.3444. the long-term trend remains bearish but further short covering may persist as the upcoming Fed meeting is not expected to rattle expectations too much. Being that there is only an accompanying statement released at the decision and no direct Yellen comments traders aren't expecting too much form the Fed. Most traders believe the Fed won't give any hawkish tips and this could aid further short covering into the meeting. The US GDP, ADP and NFP data will get more focus. Should the results be favorable for the US econ, bond yields should lift and EUR/USD's slide should resume. It's likely the 200-Week MA will be cleared and the pair may make a run to sub-1.3300 levels into the weekend.
EUR/USD The below f/c German IFO data ignited EUR/USD's latest leg lower in Europe's session. The pair collapsed from 1.3475 to 1.3440 before bouncing towards 1.3455 into NY's open. NY immediately applied pressure even after May's durable goods orders saw a big downward revision. Sour risk sentiment due to seemingly increased Ukraine/Rusia tensions saw bond yields and stocks soft while the USD and JPY were firm. EUR/USD slipped from the NY open, pierced the 200 week MA and hit a low of 1.3421 while EUR/JPY slid from near 137.10 to a 136.65 low. Both saw only minor bounces as they held slightly above the day's low late in the session. EUR may come under greater pressure next week with the catalyst liekly coming from the USD. Big data/event risk lies ahead. Wednesday gives us July ADP, Q2 GDP and the Fed. Friday brings the July jobs report. Should the results of this risk be USD bullish EUR/USD's recent slide is likely to accelerate. We're likely to then see the 200-WMA break cleanly and bears immediately target 1.3295/17 (Nov low, weekly cloud base). A break there puts the Sep low (1.3105) in play.
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