EUR Trading Outlook (07-05-2014)

AUD/USD: The close above the 21-DMA & 0.9310/20 resistance zone is encouraging for bulls and they now set their sights on 0.9425/60 resistance where the weekly cloud base & April high reside.

EUR/USD: EZ services PMIs were mostly above f/c with Germany being the noted exception while EZ March retail sales were well above f/c. EUR/USD broke above 1.3900 & ran stops through 1.3910. It sat near 1.3925 as NY got going. Early NY saw broad USD weakness as US yields were soft. Bullish pressure continued and EUR/USD hit a 1.3952 high. Market chatter of Asian reserve offers near 1.3960 and USD/JPY’s inability to make a clean break below 101.50 prevented further gains for EUR/USD. S-T profit taking and EUR/JPY’s break of hourly support near 141.60 aided EUR/USD to dip briefly below 1.3920. A late day bounce saw it settle near 1.3935. Action may be limited overnight as the pair nears the 2014 high and ascending triangle top (1.3965/70). Yellen’s testimony tomorrow and the ECB meeting on Thursday are likely to keep bulls tempered as well. Longs may decide it’s best to unload ahead of this event risk so a slight pullback cannot be ruled out. should the rally persist and the March high break, bulls will try and clear barriers touted at 1.3975 & 1.4000.