EUR Trading Outlook
EUR/USD An early European attempt to break Asia's high failed & EUR/USD dipped to 1.2414 ahead of the TLTRO. The 129bln reported was near expectations & EUR/USD bounced near 1.2465 into NY's open. Early NY saw bear charge as the USD was firm. The pair slid from the open & the fall picked up the pace after US retail sales & claims were upbeat. US bond yields bounced off recent lows and gave the USD a further boost. EUR/USD slid towards 1.2360/70 support where a series of hourly lows and the 200-HMA sit. Little bounce was seen off the support and the pair sat just above 1.2380 late in the day. There is little major econ data to drive the pair. China's Nov IP and retail sales data might impact a bit as will US Dec TR/U. of Mich. report. Technically it appears bears are taking control again. The break above the TL off October's high and the 21-DMA failed to sustain itself & a break below the 10-DMA is eyed. Daily RSI is biased down so a retest of the 2014 low can't be ruled out. A 1.2360 break bolsters that view.
EUR/USD The pair held to a relatively tight range in Europe. The top was contained by offers near 1.2400 while the base was defined by bids near the 200-HMA. The pair sat just above 1.2370 into NY's open. Early action saw bulls apply pressure as broad based USD weakness emerged. A steady ascent took hold and intra-day stops above 1.2400 were run. The lift's pace was upped after USD/JPY broke below s-t support near 119.65/70. EUR/USD shrugged off EUR/JPY's slip from near 147.60 to below 147.00 and instead cleared the TL off October's high and the 21-DMA to make a 1.2446 high. Offers into 1.2450 limited the rally to keep stops just above safe for now. Very little pullback was seen and the pair sat just above 1.2440 late in the day. The charts suggest the recent squeeze has legs as day/week RSIs are biased up after turning from oversold territory. Narrowing yield spreads support the squeeze view as well. EUR/USD bears will need a stellar US retail sales number tomorrow to get the downside back into the market's focus.
EUR/USD Broad based USD weakness in Europe's morning saw EUR/USD's short squeeze from Dec 8 persist a bit further. The rally, seemingly driven more by positioning than anything else, lift from below 1.2320 towards 1.2355 into NY's open. Shorts pushed the pair again in early NY. US yields began a serious slide and this put massive pressure on USD/JPY which inspired USD longs to cover across the board. EUR/USD paused briefly by the 200-HMA but the resistance broke and stops above 1.295 were run. The squeeze accelerated at that point and the pair quickly hit a 1.2448 high. Offers near the 21-DMA and TL off October's high stalled the rise. A rebound for US bond yields, stock and the USD then saw the pair slip for its high. Late in the day the pair slipped back towards the 200-HMA and sat just below 1.2380. Trades will keep a keen eye on China's CPI data tonight. A soft number is likely to have a knock-on effect with EUR as the EZ's inflation outlook softens. A soft CPI tonight might see risk hit and much of EUR/USD's gains from today eroded.
EUR/USD Europe drove EUR/USD towards the mid-Aug 2012 low as JPY strength sent EUR/JPY plunging through 149.10/15 support. Bears took EUR/USD to a 1.2247 low but couldn't muster further losses as broad based USD weakness trumped JPY strength. EUR/USD lifted towards 1.2270 into NY's open. The pair's lift gathered pace after USD/JPY broke below 121.00 and was unable to regain ground above there. EUR/USD's rally extended, ran weak stops above 1.2310/15 and eventually hit a session high of 1.2344. Profit taking from intra-day USD shorts allowed for a bounce and EUR/USD slipped back near 1.2320 towards the end of the day. The risk of further short covering exists as there are no major data points out of the US or EZ until later in the week and technicals suggest a lift is due. Day/week RSIs diverged on the new low and yield spread widening has slowed a bit. A test of the 1.2505/35 area cannot be ruled out as we head into Nov CPI reports out of the EZ, US retail sales and the ECB's TLTRO report on Thursday. The long-term outlook remains bearish though and only a move above 1.30 puts doubts into the l-t bear trend.
EUR/USD The pair saw some bear pressure applied in Europe’s morning. It slipped from near 1.2385 to 1.2346 before bouncing a bit into NY’s open. The pair was just above 1.2350 as NY got going and sat just below 1.2370 into the US jobs data. The NFP had a solid beat as did average hourly earnings. This prompted the mkt to buy USD as it gets the Fed one step closer to rate lift-off which many expect in the first half of 2015. EUR/USD dived as yield spreads went further in USD’s favor. The pair erased all the post-ECB based gains and hit a new trend low of 1.2271. Action quickly settled though and the pair ranged between the day’s low and 1.2309. The pair settled the day closer to the low though. With the pair ending the week near its low, it seems only a matter of when and not if the 1.2240/55 support zone is cleared. Once that support breaks the pair has little in support until the July 20102 low.
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