EUR Trading Outlook
AUD/USD: The 21-DMA and April 30 low were cleared. The slide fell short of the double lows of April 22 & 23 (1.4710/15) as it stopped at 1.4760/65. Further pressure may be put on the rally as daily RSI is biased down and yield spreads widen. Attention now shifts to RBA's SOMP later today. Any upgrades to econ growth and inflation should boost AUD further against most currencies. AUD/USD may then run for stops above 0.9400 and test weekly cloud base at 0.9425 while EUR/AUD may clear 1.4710 and April low near 1.4645.
EUR/USD: Not a good day for the EUR, or those who bought it after the ECB announced no changes to policy, only to run into a slew of hints from Draghi in his presser that the prospect of very low-for-a-long-time inflation and more downside than upside risks to the economy meant that an easing at the June meeting is a serious threat. He also noted the strong EUR's unwelcome role. EUR/USD spiked to its 1.3995 high after US Claims fell back nicely and Draghi took a little time getting to the more overtly dovish portions of his Q&A. The barrier defenses into 1.4000 held and longs trampled each other to get to the exits, removing o/n and the preceding four days' lows in the process. The 21-DMA at 1.3846 is nearby as the NY session winds down. Yellen remained true to form, but reminded that even taper completion was a function of data- dependency tests at each meeting. A poor US 30-yr auction added a little yield-differential weight to EUR/USD, but no new intraday lows yet. Today's weak German IP will place some emphasis on Friday's German Trade & C/A results. China CPI up first, after better Trade data there o/n. No good news from Ukraine.
The AUD/USD: Bids near the 21-DMA and late April highs 0.9315/20 halted the overnight slide. Tech gives a bullish tint to the pair as the pair hold above the 21-DMA again while daily and weekly RSI are biased up. Bulls are looking for a run to the weekly cloud base (0.9425) and April's high (0.9461) but caution is warranted.
EUR/USD: Ranges in the overnight session remains subdued (1.3912-1.3939 with NY seeing the pair open near 1.3925. An early lift took hold as headlines that Putin was ready to discuss a solution to Ukraine hit the wires. NY could only manage to match Asia's high. Above f/c Q1 US labor costs boosted US yields a bit & EUR/USD slid lower. Yellen's testimony sank US yields & USD/JPY and dragged EUR/JPY from near 142.00 towards 141.40. EUR/USD followed & tested the o/n lows. The low held but little bounce was seen as some longs felt it prudent to unload some EUR/USD as a precautionary measure ahead of the ECB. The pair sat near 1.3915 late in the day. The market expects little from the ECB tomorrow. Some are looking for tweaks in the bank's inflation outlook while Draghi may continue to prime the market for action for the June meeting. EUR/USD may then resume its ascent and make a run for the 2014 high and barriers at 1.3975 & 1.4000. There is some chatter in the mkt that a break of 1.40 may see a spike towards the Oct '11 high (1.4248) as l-t bears may capitulate
AUD/USD: The close above the 21-DMA & 0.9310/20 resistance zone is encouraging for bulls and they now set their sights on 0.9425/60 resistance where the weekly cloud base & April high reside.
EUR/USD: EZ services PMIs were mostly above f/c with Germany being the noted exception while EZ March retail sales were well above f/c. EUR/USD broke above 1.3900 & ran stops through 1.3910. It sat near 1.3925 as NY got going. Early NY saw broad USD weakness as US yields were soft. Bullish pressure continued and EUR/USD hit a 1.3952 high. Market chatter of Asian reserve offers near 1.3960 and USD/JPY's inability to make a clean break below 101.50 prevented further gains for EUR/USD. S-T profit taking and EUR/JPY's break of hourly support near 141.60 aided EUR/USD to dip briefly below 1.3920. A late day bounce saw it settle near 1.3935. Action may be limited overnight as the pair nears the 2014 high and ascending triangle top (1.3965/70). Yellen's testimony tomorrow and the ECB meeting on Thursday are likely to keep bulls tempered as well. Longs may decide it's best to unload ahead of this event risk so a slight pullback cannot be ruled out. should the rally persist and the March high break, bulls will try and clear barriers touted at 1.3975 & 1.4000.
AUD/USD: Mention of persistent AUD strength may get attention again as AUD/USD is basically unchanged from the April 1 meeting. Should rhetoric over AUD and recent data ramp up AUD/USD may trade heavy. Traders may then see 0.9200 break and the H&S top on daily charts complete. A break of 0.9200 immediately targets the 200-DMA. A break and close below that would open door for 0.8990/00 and then the March low near 0.8890.
The pair held in a tight range of 1.3865-87 as market await a slew of EZ services PMIs tomorrow, Yellen's testimony and ECB on Thursday. A strong PMI may see market make a run for stops above 1.3890-1.3910. However, upside should be limited below 1.3965-70 before ECB. Tech favours bulls also as long lower wicks on recent daily candles show dips are bought while the 10, 21 & 55 DMA are bullishly aligned.
The AUD/USD: 0.9190-0.9200 been holding up strong, range trades still in play but for now the AUD need to break above 0.9320-30 area for a better uptrend confirmation. Risk events coming up this week for the pair, should the results be AUD bearish, the April low may break and the developing H&S top on daily charts is likely to be confirmed. The door may then open to a test of 0.8900-25 area.
EUR/USD: The EUR slipped below the 21-DMA and pierced the daily cloud top. A low of 1.3812 was made before the market took a deeper look into the jobs data. A big drop in the participation rate tarnished the US rate drop while the payroll data and lack of wage growth gave the market the sense the report wasn't robust enough to seriously lift rates and the USD. EUR regained back above 21-DMA to a high of 1.3881 giving a better outlook for the next ECB announcement. The long lower wick on the daily candle and bullish engulfing on the weekly candle combine with rising day/week RSIs to suggest stops above 1.3906 and near 1.3930 are vulnerable.
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