EUR Trading Outlook
EUR/USD A lackluster session in Europe's morning met some stunning action in NY. The pair sat near 1.1355 into NY's open after touching a 1.1380 high in Europe. The USD rallied early on as the Fed's Bullard noted on CNBC the FOMC should remove 'patient' from its March policy statement and clear the way for a rate hike. The USD got a further boost off the solid durable goods result as US bond yields soared. EUR/USD dived down and hardly looked back until it reached its 1.1184 low. Overly zealous USD bears covering recent shorts combined with steady selling from medium and short term names to drive EUR/USD lower. A slight slip late in the day for the USD saw EUR/USD lift towards 1.1200 ahead of NY's close. Traders now look to German Feb CPI readings and US Q4 GDP report for their cues. Should US GDP come in above forecasts EUR/USD is likely to get hit again as the market will believe the chances of a Fed hike are upped. The 2015 EUR/USD low then comes into play.
EUR/USD opened NY trade 1.1343 "unch" vs last night's close, having traded 1.1347/89 overseas. The O/N pop was on a stop hunt, the stall a result of comments from Greek Fin Min Varoufakis who noted debt restructuring discussions will begin immediately. Early attention was on delta hedging EUR 1.1bln 1.1350 and EUR 2.3bln 1.1300 expiries into the NY cut. NYC traded a sedate 1.1336/69 as Janet Yellen completed her semi-annual address to Congress with almost a carbon copy of yesterday's Senate appearance. 2-Yr yields closed +1bp and 10-Yr yield closed -1bp, reflecting a clarification that a June hike is still possible (at least 2 meetings) Draghi spoke before the EU Parliament, all big picture stuff [ID:nIFR28pwZB] EUR/USD heads to the Sydney hand-off 1.1356. In the final analysis it's the Fed's view that it'll take a long while for inflation to reach target levels that appears to have shifted US long yields/ DXY psychology. Actual shifts in Fed policy have been nuances, markets may have overreacted. German Gfk, unemployment & EZ M3 & var. econ surveys due.
EUR/USD Europe bounced EUR/USD off support near 1.1295 after EG's Dijsselbloem noted EZ ministers could consider debt relief measures if Greece met all criteria. The pair neared 1.1340 in early NY. It slipped a bit after the EU commission noted Greece's list is 'sufficiently comprehensive to be a valid starting point for a successful conclusion of the review'. EUR/USD then sat near 1.1320 pre-Yellen The initial comments were taken hawkish as it looked like a rate hike was still on the table for the June-Sep period. A broad based USD rally took hold and EUR/USD dived down to 1.1288 in no time. Upon further examination of the comments it became clear Yellen wasn't as hawkish as thought. The USD's gains quickly eroded. EUR/USD rallied towards the 21-DMA as it hit a session high of 1.1359. Offers into the 21 & 10 DMA and by hourly highs near 1.1363 combined with EUR/JPY's plunge below 134.55 to keep EUR/USD's gains limited. The pair then lingered in the 1.1305/45 range for the remainder of the day with it sitting near the upper limit towards the end of day. It appears the recent 1.1270/1.1450 range will hold for the time being.
EUR/USD The pair couldn't break free of Friday's range. Europe pushed EUR/USD down to 1.1295 just ahead of NY's open. The driver was EUR/JPY's dive from near 135.50 towards 134.50. NY retested Europe's low early on but once it became clear no further losses were possible some intra-day short covering took hold. The pair lifted above 1.1320. Weak US housing data then gave an added boost and the pair tested hourly resistance near 1.1365/70. Some gains were given back on Greece postponing its list of reforms for the Euro group until Tuesday morning. The 1.1320 area was tested but JPY weakness helped stall that dive. EUR/JPY bounced towards 135 in NY's afternoon and this allowed EUR/USD to settle near 1.1335 late in the day. Traders now look to Tuesday morning's Greek news and Fed Chief Yellen's testimony to congress tomorrow in NY's morning. Should Yellen keep a June hike on the table EUR/USD should get hit. We might then see key support in the 1.1270 area get taken out and the pair make a run for the 2015 low again.
EUR/USD was whipped about in NY trade as Greek headlines were the main drivers in thin markets. Early NY saw the pair add to Europe's losses driven by a German Govt spokesman noting Greece's proposal didn't go far enough and EUR/JPY's dive (drop from 135.10 towards 133.55). NY slipped EUR/USD to a 1.1278 low but bids near the key 1.1260/70 support zone couldn't be seriously tested. Some short covering ensued. The lift accelerated after some positive Greek headlines hit the wires. EU's Juncker stated "a Greek exit from the Euro won\'t happen" and Eurogroup's Dijsselbloem noted ' there is reason for optimism after talks with main players in Greek bailout talks". The market leaned towards a deal and the pair rallied to 1.1430. The gains were then consolidated around the 1.1400 area but the pair dipped towards 1.1370 late in the day after Dijsselbloem noted the EZ ministers' meeting on Greece was a first step to rebuild trust. This left the market with a less clear picture which aided the late-day sales. Traders are now on edge heading into the weekend as the Greek issue still seems in doubt. Sunday's Sydney opening could be interesting if the Greek situation deteriorates.
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