EUR Trading Outlook
EUR/USD Shorts were squeezed after the mixed EZ PMI results. EUR/USD popped from near 1.3650 towards Asia's 1.3688 high. No further gains were possible though and the pair lingered just above 1.3680 as NY got going. Weak US data in the form of housing and jobless claims couldn't inspire a lift for the pair and a steady drift lower took hold for the NY session. A low of 1.3645 was eventually hit as US yields continued their recent bounce. Aiding the slide is the fact that EUR/USD is getting more comfortable near recent lows and no short squeeze seems forthcoming. Other factors to help the pair lower today was ECB's Wiedmann stating that reviving the ABS mkt isn't a task for a central bank as well as an ECB source stating it will be recommended that Dexia can avoid the EU's bank stress test. A small bounce saw the pair just above 1.3650 late in the day but lower levels look to be coming. Much of the May 21 bounce off the 200-DMA has been erased, day/week RSIs remain biased down and yield spreads edge further in the USD's favor. A break & close below the 200-DMA opens the door to 1.3475/80 support.
AUD/USD: The trend remains down but support into 0.9200 looks tough for now. A long lower wick on the daily candle is in place to suggest recent losses may need to consolidate before 0.9200 breaks.
EUR/USD: EUR made another attempt into 1.3730/40 resistance on the drop of USD/JPY to 100.80 area. Rebound on US yield then added pressure to EUR and the pair dived towards 1.3655. As Europe closed, the pair then went on a stop loss hunt, the EUR took a quick dive to the 200-DMA. Short covering started as we were close to the recent low and also a slid on US yield which pushed the pair towards 1.3680-90 area. EZ PMIs are due today, soft reading may see 200 DMA retested.
AUD/USD: The bull channel base and daily cloud top have been broken while day/week RSIs are firmly biased down. A clean break of the 55 DMA likely add more pressure and should lead to test of key support near 0.9200. Beyond that traders look for a test of the 200-DMA at 0.9171.
EUR/USD: Tight ranges were in play yesterday, EUR/USD was dragged down by the drop in EUR/JPY and EUR/GBP while USD/JPY traded heavily for most of the day. NY held the 1.3687/1.3706 range. The pair seems to be getting comfortable near recent low of 1.3645 and numerous rally was seen into the daily cloud and towards 100-DMA. If tomorrow's statement from FOMC stands on the same line as Plosser then EUR/USD is likely to trade heavy and may see May low & 200 DMA (1.3632) tested.
AUD/USD: Should NY's slide continue overnight, stop touted under 0.9320 and 0.9290 may get run. If the latter are run key 0.9200/05 support is targeted.
EUR/USD: No fresh lows were seen and NY lifted the pair towards 1.3730 but comments from ECB's Mersch gave a quick smack down. Mersch stated the likelihood ECB's GC will act in June has grown substantially while also noting the GC's unanimous willingness to use conventional & unconventional tools to counter low inflation risks. EUR dived to 1.3700 are and was bought on the dip. A new session high of 1.3734 was hit but offers sitting ahead of the 100 DMA capped. Short covering may limit the downside while the daily cloud top & 50% fib of 1.3995-1.3648 may cap gains.
AUD/USD: The trend remains up as spreads widen a bit and day/week RSI remain biased up. The weekly doji occurring at the weekly cloud base & TL off October's high does suggest some indecision though. A clean break & hold above the tech resistance should reignite the l-t rally. A break of 1.4555/65 support is EUR/AUD may help push AUD to a new high trend.
EUR/USD: Short covering rallies have been limited. Offers ahead of the 100-DMA (1.3740) conspired with the daily cloud base & 23.6Fib of 1.3995-1.3648 to keep the day's high limited to 1.3727. EUR/JPY failed to break above 139.45/50 resistance initiated a slide and took EUR/USD with it. For now, range trading still in play, market awaits for Buba's speech and Thursday's Manufacturing and services PMI. A soft reading may encourage bears to push towards 200-DMA (1.3628).
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