EUR Trading Outlook
The Euro (EUR) the EUR/USD reversal yesterday has put the focus back on the downside with the 1.3000 big support level just below the 1.3050 closing levels. The market is suffering under the broad USD rally and the recent downtrend in the major. The EUR/JPY is dominating the headlines and charts of most traders with lots of daily movement and potential both way action.
The Euro (EUR) the market seized on the Bernanke testimony to surge above a 1.3100 and 1.3120 and we are moving higher in Asia as the short squeezed continued. The EUR/JPY is driving the market higher with the extremely volatile cross tracking the USD/JPY surge. Solid Italian bond auctions last night underpinned the move higher. ECB Draghi commented that the ECB was nowhere near ready to exist loose monetary policy.
The Euro (EUR) tried to rally but was stopped at 1.3120 on two occasions with the lingering uncertainty from the gridlock in the Italian elections encouraging sellers. The EUR/JPY downtrend added to the EUR/USD pressure with traders targeting Y118 and 1.2988 respectively. The Bernanke testimony while leaving QE3 on the table also highlighted the difference in the strength of the two economic powerhouses.
The Euro (EUR) the EUR/USD rallied to 1.3270 before crashing on the hung Italian parliament polls and we are targeting a 1.3000 break if the selling continues into Europe. EUR/JPY fell over 600 pips from the Monday open and was the catalyst for the USD/JPY slide which added to the EUR/USD selling pressure. The market will be closely watching the developments in coming days to see if a political deal is made and what comments the new leader makes regarding recent austerity.
The Euro (EUR) the EUR/USD managed a small rally in the US session but this failed and we are back under 1.3200 Monday with the sellers still in control. Some concern about a possible hung Italian parliament and the effect it could have on reigniting the European debt crisis has been noted as opinion polls suggest a very tight result at the weekend’s elections.
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