EUR Trading Outlook (31-07-2014)

EUR/USD Steady bullish USD pressure saw Europe crack the 1.3400 barrier. Downside follow through was limited as the pair bounced off 1.3394 and sat near 1.3400 into NY’s open. Tight ranges held even after ADP’s miss saw only a limited lift. GDP’s big upside surprise woke the mkt from its nap and EUR/USD dived lower. 1.3667 was hit before light position squaring pre-Fed had the pair near 1.3380 into the Fed decision. Post-Fed saw algos go wild. The pair spiked to a new trend low of 1.3366 (aligns near the 50% Fib of 1.2740-1.3395) as the Fed made note of inflation’s likelihood of running persistently below 2% has ‘diminished somewhat’. Those losses were erased quickly as the the Fed also noted labor mkt slack and that they would remain accommodative. A short covering bounce lifted the pair to 1.3405. US yields didn’t give back much of their gains though and the pair slipped towards 1.3390 late in the day. Jobless claims, Chicago PMI and NFP are the next catalysts. Bulls need further robust US data for a break of the 50% Fib and test of the weekly cloud base & Nov low (1.3317 & 1.3295).