EUR Trading Outlook
EUR/USD Short covering in Europe had the pair test near 1.0650 before pulling back below 1.0600 into NY's open. NY bid the pair up early as shorts bought the dip. The lift got an added boost after US retail sales missed big and prior sales data results saw downward revisions. US bond yields fell and the USD saw a broad based spike down. EUR/USD quickly hit a 1.0684 high but the gains didn't last long. Solid offering interest in the 1.0685/00 zone and talk of sovereign selling saw the pair quickly slip below pre-retail sales levels. The slide deepened in NY's afternoon as bond yields clawed back some losses after a disappointing US 30 year bond auction. EUR/USD slipped just below 1.0600 and lingered nearby heading into the close. There is little major data from either the EZ or US tomorrow so action might remain choppy or be driven by positioning. With the market still well short EUR we might see bears get squeezed further into the weekend and ahead of the Fed next Wednesday.
EUR/USD Those looking to sell a rally lost patience in Europe's morning. RM and corp names came to market , hit bid and drove EUR/USD towards 1.0555 just ahead of NY's open. Early NY saw a profit taking lift take hold. The lift accelerated a bit as broad based USD weakness took hold. Spec offers at 1.0630 were left untouched though as the pair could only reach 1.0628. A slow drift ensued. The pair then tested near the lows on ECB's Nowotny commenting on not not fully understanding the impact of negative rates. The uncertainty didn't sit well with the market and Europe's low was retested. That low broke later as according to DJN Germany's Schaeuble noted the Euro's slide vs. the USD 'wasn't completely unwanted'. The pair went on to a new low of 1.0511. Option related bids ahead of 1.0500 and some profit taking saw the pair lift towards 1.535 and it sat nearby late in the day. Feb CPI data from numerous EZ nations, a speech from Buba's Weidmann and US retail sales are the big risks for tomorrow. A solid US sales result should keep EUR/USD under pressure.
USD/JPY Once again, the yen held up better against the USD onslaught than any of the other major ccys, in large part due to falling yield spreads and growing concerns that the surging USD will begin to create negative feedback loops in some markets, including the key US equity market and in regions with hefty USD debts to repay. Regardless, Fed-BOJ policy divergence - former on hold & hoping to raise rates some day, while latter balloons it balance sheet via QQE2 - and Japanese outbound investment flows led by the GPIF are keeping USD/JPY on the rise. There's the usual talk about fiscal yr-end flows impeding prices, but so far it looks like natural exporter sales on top toward 122. EUR/JPY's plight worsened as 2-yr DEM-JPY yields spreads fell to -26bp and prices broke the 38.2% of the '12-'14 uptrend at 128.52, as well as the Jul-Aug '13 lows by 128. The lower 21-mo Bolli is next at 127.40 and falling. GBP/JPY broke the 50% retrace of the Feb rally at 181.30 that had kept prices aloft Monday & Friday. BSI Q1 survey results and weekly investment flow data are on tap tonight from Japan. US Retail Sales Thur and FOMC next week are key events.
EUR/USD Bears pushed EUR/USD below 1.0750 in Europe on fears of Greece's ability or willingness to pay debts and broad based USD strength. NY walked in with the pair slightly off the lows. Early NY saw a lift above 1.0790 as USD/JPY fall from the 122.04 high brought on general USD weakness. EUR/USD's gains evaporated though. The USD's slide abated and general risk-off sentiment took hold. Soft US equities and bond yield combined with a strong JPY to push EUR/JPY down below 129.50. This dragged EUR/USD lower from NY's high and towards 1.0690.Little lift from the low was seen as the pair sat just off the low late in the day. Bears are in control after a brief pause yesterday. Bear biased RSIs and widening yield spreads aid their cause. The clean break below the Sep 2003 low now have bears targeting the 1.0500 area where the Dec 202 high and March 2003 low sit. Longer-term bears are now taking about a move to parity as well. Upcoming risks today are China's retail sales and Draghi's speech to the Center for Financial Studies in Frankfurt Germany.
USD/JPY The 122.04 multi-year high scored in Asia was followed by a few more futile attempts to run past Japanese exporter and other offers by the figure. This wasn't surprising given the intraday tumble in Tsy-JGB yield spreads and equity prices that began just before the high was scored. Japanese pensions, likely led by GPIF, appeared to leave their fingerprints as JGB yields climbed again, but this time there was not offsetting rise in stocks, there or here, just more Tsy buying. The latter was from all corners and has thus far managed to keep USD/JPY atop its hourly Cloud, even though 121 was breach in NorAm trading. More support is by 120.60 and 120.40. A potential bigger threat to USD/JPY's uptrend is today's N225 futures break below the uptrend from Jan lows. Between that, rising JGB yields and the big downward revision to Q4 GDP, the mkt will rumble louder for BOJ QQE3 this spring, rather than in H2 as had previously been the consensus. Grexit, Corinthia, France's 2-yr fiscal target can-kick and ECB QE took EUR/JPY to new trend lows and below 130. Daily & monthly tech targets are by 128.50. JPY Corp Prices & Machine Ords are out tonight.
EUR/USD Europe pushed the pair slightly above 1.0900 just ahead of NY's open on the back of ECB bond buying, yield spreads narrowing a bit and light short covering. NY applied bear pressure immediately though. Traders ignored the slide in US bond yields and instead focused on overall USD strength. Real money names were again noted sellers and EUR/USD slipped to a 1.0838 low for NY. Headlines relating to Greece were largely ignored by the market as were comments by ECB's Weidmann that questioned the ECB's bond buying on its initial day of purchases. Some of the USD's gains eroded in the afternoon and EUR/USD lifted back towards 1.0860 late in the day. Upcoming Asian & European session might be limited in action as there is little major data to impact the pair. China's inflation data later on might impact a bit but it's likely the market will wait until Thursday when several EU nations release February CPI results.
EUR/USD Europe didn't wait for the US jobs data to smash EUR/USD. RM names clobbered the pair at Europe's opening. The pair dived from the 1.1025 area towards 1.0930 into NY's open. Some USD long covering by shorter-term RM names allowed the pair to lift near 1.0990 ahead of the jobs data. The USD and US yield soared on the better than f/c jobs report as the market now believes the Fed may change their language at the next meeting and July Fed funds futures showing near 25 bps of hikes. The only disappointment in the report was average hourly earnings but the market ignored it. EUR/USD spiked down to 1.0843 before any type of bounce took hold. A small lift near 1.0880 met sellers and the pair then went on to hit the day's low at 1.0842. A give back of some USD gains late in the day allowed the pair to sit near 1.0865 late in the day. A slew of China econ data and the Eurogroup's meeting on Tuesday are the next risks for EUR/USD traders. As it stands now bears control the pair still and a test of the September 2003 low looks likely.
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