EUR Trading Outlook
The Euro (EUR) the main currency in action yesterday paring back gains against the USD, JPY and GBP before stabilizing into the close of New York. EUR/USD fell to 1.3370 from 1.3550 as Draghi was downbeat on the Eurozone outlook for the rest of the year and left the door open to be critical of FX moves if they affect ECB forecasts after the release of EU economic data in February. In particular he is concern about higher Euro potentially causing lower inflation. EUR/JPY fell as low as Y124.50 but has since recovered to Y125.50 with a bounce in US stocks.
The Euro (EUR) came under pressure as verbal sparring between France and Germany over the current exchange rate of the Euro intensified. The EUR/USD spiked initially after a comment from Germany that the Euro isn’t overvalued. This was short-lived as France put the EUR/USD on the agenda at Monday’s Eurogroup meeting. Profit taking set in during the US session as traders book profit ahead of the ECB meeting today. Draghi’s press conference will be the main event today especially in regards to the recent Euro strength.
The Euro (EUR) was the driver of the market via the EUR/JPY cross which fell to Y124 at the start of Europe before running into what is being called a ‘monster’ EUR/JPY buy order out of the Middle East. In one of the sharpest moves higher in recent memory we saw Sovereign names from the Middle east appear aggressively on the buy side in what many analyst assume is a foreign reserve shift away from the Japanese Yen.
The Euro (EUR) the EUR/USD took the brunt of the selling pressure overnight plummeting to 1.3500 support after the yields on Italian and Spanish Debt jumped sharply. The market had been buying Euro for some time so a correction was due but the speed of the selling and the volume could prompt further profit taking. The Euro was sold on all the crosses as well especially on the EUR/AUD which had been enjoying a strong uptrend.
The Euro (EUR) EUR/USD was able to take advantage of the ‘not to bad not too good’ jobs numbers which suggested the FED would not be moving anytime soon on stopping bond buying purchase. The EUR/USD hit 1.3700 briefly at the height of the optimism but we have seen significant profit taking in Asia so far Monday back down to the lower 1.3600 region. EUR/JPY is the strongest pair in the market and proving considerable support.
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