EUR Trading Outlook (08-05-2014)

The AUD/USD: Bids near the 21-DMA and late April highs 0.9315/20 halted the overnight slide. Tech gives a bullish tint to the pair as the pair hold above the 21-DMA again while daily and weekly RSI are biased up. Bulls are looking for a run to the weekly cloud base (0.9425) and April’s high (0.9461) but caution is warranted.

EUR/USD: Ranges in the overnight session remains subdued (1.3912-1.3939 with NY seeing the pair open near 1.3925. An early lift took hold as headlines that Putin was ready to discuss a solution to Ukraine hit the wires. NY could only manage to match Asia’s high. Above f/c Q1 US labor costs boosted US yields a bit & EUR/USD slid lower. Yellen’s testimony sank US yields & USD/JPY and dragged EUR/JPY from near 142.00 towards 141.40. EUR/USD followed & tested the o/n lows. The low held but little bounce was seen as some longs felt it prudent to unload some EUR/USD as a precautionary measure ahead of the ECB. The pair sat near 1.3915 late in the day. The market expects little from the ECB tomorrow. Some are looking for tweaks in the bank’s inflation outlook while Draghi may continue to prime the market for action for the June meeting. EUR/USD may then resume its ascent and make a run for the 2014 high and barriers at 1.3975 & 1.4000. There is some chatter in the mkt that a break of 1.40 may see a spike towards the Oct ’11 high (1.4248) as l-t bears may capitulate