EUR Trading Outlook (01-05-2014)

AUD/USD: Europe lifted the pair to the 200-HMA but the gains were quickly erased as EZ CPI didn’t see bearish follow through for EUR. EUR/AUD leaped off the 21-DMA and aided AUD/USD’s tumble towards 0.9260 as NY started. Market now waits for China PMI, a poor data may see AUD test 0.9205/25 again and a better data could see stops above 0.9310/20 area run and put the April high back in play.

EUR/USD Bears were uninspired after EZ CPI was slightly below f/c and a massive short squeeze ensued. Asian buying of EUR/USD and models covering EUR/CAD & EUR/AUD shorts aided a rally to have the pair near 1.3825 as NY got going. ADP’s beat saw little mkt impact. US GDP’s miss nudged the rally further with only a brief pullback occurring after Chicago PMI was well above expectations. The pair hit a 1.3877 high & dipped toward 1.3860 ahead of the Fed. The Fed was steady with taper and had a slightly upbeat assessment of the US econ. A brief USD bounce saw hourly sup near 1.3855 tested but it held. US yields had been sliding ahead of the Fed and slid a bit more afterwards. EUR/USD retested the day’s high before settling just below 1.3870 late in the day. Bulls weren’t willing to challenge corp offers in the 1.3880-00 region as the US ISM due Thursday & NFP on Friday loom. The data points are more current than GDP and give a more accurate assessment of the econ. Should they reflect the weak GDP EUR/USD may break >1.3900 and try to run stops touted in the 1.3920/30 region.