EUR Trading Outlook (16-07-2014)

EUR/USD A disappointing ZEW report and a renewed slide in Portugal’s BES shares saw Europe drive EUR/USD lower. The pair was driven down from the 1.3628 high and back below the 21-DMA. It hit 1.3587 before bouncing towards 1.3605 into NY’s open. Early NY saw a lift to 1.3620 after the headline US retail sales number missed estimates. The lift began to fade after traders delved deeper into the data and decided it wasn’t all that bad. A dip near 1.3590 ensued and the pair sat just above that level into Yellen’s testimony. The Chairwoman’s prepared text noted that high accommodation is still appropriate. US yields and the USD slid. EUR/USD spiked to 1.3612 but the gains quickly reversed. The Q&A session had a bit of a hawkish tilt to it. The USD and yields lifted again and EUR/USD quickly slid lower. A low of 1.3562 was hit. Very little bounce was seen even as US yields gave back some gains and stocks were firm. The pair sat near 1.3565 late in the day as the market may now be thinking that US yields will be rising sooner than anticipated and the ECB will be easy. A 1.3500 test may come soon.