EUR Trading Outlook (26-05-2014)

EUR/USD The German IFO miss tripped stops below 1.3635/40 and a new trend low of 1.3616 was hit just as NY walked in. NY couldn’t push the pair lower though as bids ahead of the 1.3600 barrier, slightly narrower yield spreads and a market positioned short into the long US weekend made it prudent for shorts to cover a bit. Even headlines from asset manager Blackrock noting reduced peripheral EU bond positions and comments from ECB’s Coeure saying a negative depo rate is an option couldn’t inspire bears. NY lifted EUR/USD off the low and briefly had it touch 1.3643. A lift for USD/JPY above 102.00 pushed EUR/USD down again and it sat just below the 200-DMA late in the session. Bears rule the roost for now as a new trend low is set & the 200-DMA is pierced. The MA break saw only limited follow through and bears may need a more decisive move below it before feeling more confident in pushing the pair lower. Techs still support the slide as day/week RSIs remain biased down with no divergence. Once the slide picks up speed, longer-term bears target the Jan/Feb lows near 1.3475/80 initially.