EUR Trading Outlook (12-08-2014)

EUR/USD Traders largely ignored Stanley Fischer’s first speech as a Fed member where he leaned dovish. They instead focused on the firm USD and early lift in US bond yields. Although action was limited in EUR/USD it did remain on the heavy side for the European and NY sessions. The pair was pushed from just above 1.3400 in Europe & hit a session low of 1.3381 in NY. EUR/USD sat just above the day’s low late in the session even as US bond yields gave up earlier gains. The lift from last week’s low may still have legs though as the market has its largest net EUR short position in 2 years (CFTC). Recent shorts have little to show for their efforts though and they may need to cover soon as data risks are coming. Tuesday brings German and EZ August ZEW reports, Wednesday brings numerous EZ CPI reports and Thursday is Q2 GDP for the EZ and Germany. Should these data points surprise with a good showing, a squeeze might be in the making. Resistance sits near 1.3435/45 with stops beginning near 1.3470. If the stops are run the pair may make a run for the 1.3550 area where the 55-DMA and July 21 high sit.