EUR Trading Outlook (25-08-2014)

EUR/USD After Asia’s failed attempt to bid prices back above 1.3300, EUR/USD trundled lower on spec selling interest that intensified after Yellen’s JH speech. The session low at 1.3220 landed right on the 61.8% retracement of the ’13-’14 rally. Neither Yellen’s speech nor the papers presented on the labor markets created a crisp insight into policy or a solid case for the Fed accelerating its cautious normalization plans, which left an oversold mkt facing pre-weekend short profit-taking into the London close. The same calculus applied after Draghi’s speech in the afternoon. Without a major policy shift, the urge to book some profits prevailed, particularly as morning Tsy bond yield gains were trimmed. That said, the front of the curve has held most of it yield rise from Yellen. Draghi sounded a brave note re TLTROs, ABS, GDP improvement and room for further EUR/USD slippage due to diverging Fed & ECB policies. QE was also hinted at as a backstop, but the more the EUR falls, the less pressure there is for new easing measures. Barriers at 1.3200 go wanting, but the week’s ending well below the weekly Cloud; a M-T sell signal in-and-of itself.