USD Trading Outlook (03-06-2014)

EUR/USD The generally below f/c Final EZ PMIs aided a EUR/USD drop to 1.3594. The slide halted on profit taking ahead of the ECB by a short market and talk of a reserve manager bids near 1.3590. The pair bounced near 1.3610 as NY got going. The bounce continued to 1.3628 after the soft German inflation data failed to inspire bears. Aiding the bounce was EUR/JPY’s spike from near 138.80 to 139.25 after Abe’s growth plan draft hit the wires. EUR/USD couldn’t must more gains though and began dipping as US yields continued their climb begun late last week. A brief blip up after the PMI data was miscalculated. Talk circulated that the report was incorrect and the USD gained strength. The initial data report was eventually corrected to show a result in line with forecasts. US yields added to earlier gains and the USD stayed strong. EUR/USD made a run at last week’s low but couldn’t crack it as 1.3588 was all bears could muster. Little bounce was seen though as the pair sat near 1.3595 late in the day. The pair has consolidated in the 1.3585-1.3650 range and is likely to do so until the ECB.