EUR Trading Outlook (06-08-2014)

EUR/USD Above f/c EZ services PMIs & above f/c retail sales results were ignored by Europe as broad based USD strength prevailed. A sharp sell-off saw RM bids into the 1.3400 area filled & the pair slip towards 1.3690 into NY’s open. Recent US bond yield weakness wasn’t evident in early NY & the USD stayed generally bid. EUR/USD’s slide pushed further in NY & accelerated after US non-Mfg PMI came in above forecasts (highest since 2005). Bond yields rallied, USD/JPY spiked up to 102.93 & EUR/USD hit a 1.3358 low. Profit taking from spec names & 1.3350 barrier protective bids halted the slide. Risk sentiment soured quickly in NY’s afternoon as equity mkts tanked & US yields gave back some earlier gains. EUR/USD rebounded off the low just a bit to sit near 1.3375 late in the day. The new trend low keeps the bearish bias intact as do day/week RSIs providing negative momentum. Bears feel confident and that is evidenced by their selling ahead of the ECB Thurs. Should Draghi up the dove talk bears will press further. 1.3295/1.3317 (Nov low, weekly cloud base) are then targeted.