EUR Trading Outlook
The Euro (EUR) was crushed lower after being hit by dovish comments at the ECB meeting press conference. The ECB lowered its 2013 GDP forecasts but the major comment that traders picked up on was that the OMT was only to be used in emergencies and not to lower yields. The uptrend is under threat from the correction lower on the major and Euro Crosses. The Sterling (GBP) was dragged lower be the Euro slump but we have found support at 1.6050 on Cable. EUR/GBP fell below 0.8100 and has traded as low as 0.8070 so far in Asia. The outlook is mixed with bulls cautious given the new Euro developments and US NFP today. The BOE met and kept rates at 0.5% as widely forecast. Looking ahead, ECB President Draghi Speaks. Also German Industrial Output forecast at -0.5%m/m vs. -1.8% m/m/
The Euro (EUR) hit day highs in Asia near 1.3125 before reversing back below 1.3100 in Europe on USD strength given a weak Spanish Debt auction ahead of today’s ECB meeting. The ECB is forecast to hold at 0.75% but focus will be on President Draghi’s Speech. Support was found at 1.3080 and the uptrend still remains in place. The Sterling (GBP) remained at the 1.6100 level in very tight range which is unusual for the Pound which usually trades in a 100 pip+ daily range. The BOE meet tonight to discuss UK interest rates and are widely expected to keep rates at 0.5% and the asset purchase program at 375bn. Looking ahead, ECB Interest Rate Decision forecast to hold at 0.75%. BoE Interest Rate Decision forecast at 1.0% previously.
The Euro (EUR) broke above 1.3100 and is nearing a key resistance at 1.3140-80 (Oct 17 High) where the bears are expected to make a stronger stand. Tail risk is the scenario where the Eurozone breaks up or a country defaults on debt. There has been a significant drop in the tail risk out of Europe over the last month with progress being made on crises out of Greece and Spain.
The Euro (EUR) shot above 1.3000 to fresh multimonth highs just under 1.3080 after Spain formally requested aid for its banks and Greece successfully completed its bond buyback program. Bond Yields from Greece to Spain and Italy all dropped dramatically and suggest further topside for the single currency.
The Euro (EUR) the EUR/USD hugged the 1.3000 on Friday with little incentive to push higher given profit taking on stocks. Germany approved bailout money for Greece but October EU Unemployment hit 11.7% vs. 11.6% previously for a fresh all-time Euro era high.
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