EUR Trading Outlook
EUR/USD Europe made two tries to take the pair through 1.2560 even as econ data out of Europe was a bit upbeat. After the failed tries short covering lifted the pair near 1.2590 as NY walked in. Another try to break lower ensued on the GDP headline miss. EUR/USD spiked down to 1.2545 but T/P bids from those who shorted overnight prevented further losses. The slide then reversed after a second look was taken at GDP's internals. They didn't instill confidence that US rates should rise. US yields and the USD gave back the post-GDP gains and EUR/USD quickly recovered ground above 1.2600. Yields slid a bit more and the pair went on to hit a 1.2632 NY high. Some of the gains were given back after talk of a Nikkei report citing GPIF investment allocations sent USD/JPY soaring. EUR/USD slide from its NY high and sat near 1.2610 late in the day. Traders now look to the Oct. EZ CPI due tomorrow. A soft number should see bear pressure applied to EUR/USD. A big downside CPI miss is likely needed to see a serious test of key 1.2500 support.
EUR/USD An early dip to 1.2725 in Europe was bought. Risk sentiment was buoyed as equity markets & JPY crosses were firm. EUR/JPY rallied from 137.35/40 & aided EUR/USD's lift towards 1.2745 into NY's open. Bull pressure persisted in early NY as JPY crosses were well bid. EUR/USD's lift got an extra boost after large options near 1.2700/25 were not close enough to pull the pair lower. USD sales then took hold post-expiry & EUR/USD spiked to a 1.2770 high. Action settled & light profit taking took hold as the market awaited the Fed. The Fed's notes to labor resources gradually diminishing and the likelihood of inflation running persistently below 2% diminishing sent US yield and the USD soaring. EUR/USD was near 1.2740 pre-Fed & quickly hit a 1.2633 low afterwards. A slight bounce was seen & the pair sat just above 1.2645 late in the day. Bears are encouraged as a bear engulfing candle forms & the pair is back below the 10 & 21-DMAs. Daily lows at 1.2614 & 1.2605 are key s-t supports. Breaks open up a 1.2500 test.
EUR/USD An early rally in Europe was rebuffed after EUR/USD failed to climb above the 200-HMA. The sell-off from the 1.2715/20 area saw 1.2685 hit. A rebound occurred as EUR/JPY lifted off from the 136.95 area. EUR/USD bounced & sat just above 1.2700 into NY's open and US econ data. Durable goods saw a big miss. US rates and the USD fell broadly. EUR/USD cleared the 200-HMA and ran spec stops just above it. Asian offers in the 1.2735/45 area were well absorbed and the pair went on to hit a 1.2765 high. The pair dived back to the 200-HMA after consumer confidence was solidly above f/c. The dip was bought though as EUR/JPY's rally was unrelenting on its trip to 137.81 high. EUR/USD bounced back above 1.2740 and spent the remainder of NY range-bound in the 1.2740/55 zone. The market's focus now shifts to the Fed. Should the Fed acknowledge recent soft US data and lean dovish it's likely EUR/USD will remain bid as US rates adjust lower. A trip toward 1.2900 and possibly 1.3000 cannot be ruled out at that point.
EUR/USD The below f/c German IFO numbers pushed EUR/USD lower from near the Asia high and had it near 1.2770 into NY's open. NY made one early push lower & hit a low of 1.2665 but no further looses could be made. A bounce above 1.2780 took hold then as MNSI quoted ECB sources citing barriers to QE and that need to let old measures work. The sources also noted a GC move in '14 is unlikely absent a big econ or inflation shit. A few rounds of soft US econ data aided to speed EUR/USD's lift higher as US bond yields and the USD were heavy. The pair cleared spec offers into 1.2700 and hit a high of 1.2723 and left stops for those specs at 1.2725 untouched. Some profit taking by intra-day longs and stall in the USD's slide prevented further gains but little pullback from the high was seen. Late in the day the pair sat just above 1.2710. There is no major data due from the EZ so traders will look to the USD side of the equation for direction. Tomorrow's durable goods & consumer confidence data may ignite some sparks. The Fed meeting Wed. is the next big risk. Short covering until then cannot be ruled out.
EUR/USD A tight range held in Europe's morning as EUR/USD lingered 1.2635-65 with it ultimately sitting near 1.2650 into NY's open. A quiet session looked set to hold in NY but a flurry activity ensued on a leak of the ECB draft on the bank AQR. The story noted that 25 banks would fail the tests at the end of 2013. EUR/USD dived down near 1.2645 but quickly recovered as traders took a second look at the story. It was also noted that only 10 of the banks face shortfalls at the moment. EUR/USD then saw a relief rally as European bank stocks rallied. The pair ran s-t stops above 1.2680 and worked through Asian offers up to 1.2690 before hitting a 1.2694 high. The pair slid off the highs as Germany's Merkel & France's Hollande hit the wires. Merkel noted that Draghi made it clear to EU leaders that reforms & improved investment was key for the EU recovery while Hollande stated that dialog on France's deficit reduction continues but "France thinks it has done what is necessary'. EUR/USD hit 1.2660 but then sat near 1.2670 late in the day. Traders now await the official test results due Sunday.
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