EUR Trading Outlook
The Euro (EUR) Draghi didn’t disappoint overnight announcing a large broad scale unlimited bond buying program to target the 1-3 year maturities. Dubbed the Outright Monetary Transactions (OMTs) the plan is stop traders betting against the Eurozone. Some questions remain about the legalities of the OMT and some opposition remains from Germany who believe the plan is tantamount to financing government deficits. Italian and Spanish yields did drop however and this is the main intent of the Plan. EUR/USD is strong but has already rallied in anticipation of the plan and is finding resistance near 1.2650.
The Euro (EUR) attention is now firmly on the ECB and some traders have overlooked another major development overnight with the EUR/CHF lifting off the 1.2000 level to rest at 1.2040 as we speak. The Euro will be volatile today so traders should use strong risk management practices when deciding where to place stops.
The Euro (EUR) the EUR/USD fell from the lofty 1.2600 heights overnight as Moody’s downgraded the outlook for the European Union. Also hurting was a German article stating the ESM was illegal. This is ahead of the ECB meeting on Thursday where expectations are mounting for a big announcement. Caution should be employed given last month’s disappointment that led to a 300 pip fall for the EUR/USD post ECB meeting.
The Euro (EUR) the EUR/USD retested resistance above 1.2600 overnight but failed to hold above the level in light trading with some profit taking near the top. The outlook is positive with traders only reacting to positive news from the Eurozone lately whilst ignoring the negative.
The Euro (EUR) the EUR/USD broke above 1.2600 before the Bernanke Speech and then reversed sharply as no announcement was made. The market was still keen to buy on the dip however and optimism is growing that the ECB will announce new measures at Thursday’s meeting to support the Euro. Downgrades to Spanish states and banks have had little impact with ratings fatigue setting in after so many downgrades.
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