EUR Trading Outlook (08-08-2014)

EUR/USD Europe was quiet pre-ECB. Rates were unchanged & EUR/USD held just below 1.3375 into Draghi’s presser. A mention of intensified prep work on ABS by Draghi early in his presser saw algos take the baton & run. The pair sank near 1.3350. As Draghi continued he wasn’t throwing bears anymore bones. A squeeze saw an approach near the 200-HMA as 1.3394 was hit. Draghi then jawboned EUR lower. He noted fundamentals for a weaker FX rate are much better now while also noting that monetary policies in the EZ and US are diverging & will do so for a long time. EUR/USD dived down to 1.3337. Increased sour risk sentiment (JPY strength, lower US yields & stocks) aided the slide. EUR/JPY suffered as well as it neared key 136.00/25 support. EUR/USD managed a slight bounce & sat near 1.3360 late but EUR/JPY saw little relief as it sat just above 136.30. Draghi now hopes for solid US data so rising US yields can push USD up. He may have to wait as there is no major data due until next Wednesday. Should geopolitical risks increase EUR will be under pressure as Draghi noted they will impact growth. EUR may stay heavy into the weekend on as traders fear that risk possibility.