EUR Trading Outlook (21-07-2014)

EUR/USD A quiet overnight session quickly erupted into a bearish frenzy. After sitting in a tight near-20 pips range EUR/USD dived in early NY. The action seemed ignited by a double shot of bad news out of the EZ. Belgium consumer confidence hit the lowest reading in 11 months as came in at -10 (prv -7) and Bank of Italy lowered 2014 GDP estimates to 0.2% from 0.7% “with risks to the downside”. EUR/USD filled the sov bids into 1.3500 and cleared the 1.35 barrier. It quickly hit a low of 1.3491. Bears couldn’t push further though as profit taking from a market already short stemmed the slide. A quick bounce back above 1.3500 ensued and the bounce persisted as risk sentiment improved and stock market s rallied. EUR/USD briefly traded above 1.3530 before pulling back near 1.3525 late in the day. Bears face some risks now. The TL off the 2012 low was pierced but losses below it couldn’t be sustained, a doji forms on the daily candle while RSI diverges on the new trend low. while the l-t trend is bearish a short squeeze cannot be ruled out. A test of 1.3610/30 resistance cannot be ruled out.