EUR Trading Outlook (04-09-2014)

EUR/USD Bears were looking for an excuse to lighten up on shorts ahead of tomorrow’s ECB meeting. News out of the Ukraine/Russia situation seemed to indicate tensions were easing. EUR/USD spiked up above 1.3155. Some contradictory follow-up statements on the issue saw some of those gains erased and the pair slipped towards 1.3140 into NY’s open. NY pushed the pair higher early as the USD was soft and bond yields slipped from their highs. A high of 1.3160 was hit but Asian offers sitting 1.3160/70 capped the rally. Soft stocks and JPY strength then pressured EUR/JPY from its 138.28 high towards the NY low of 137.73. This helped EUR/USD slips from its high and down to 1.3135 before rebounding just above 1.3140 late in the day. EUR/JPY saw only a slight bounce off the low and sat near 137.80 late in the day. Traders now look to the ECB for their next cue. Action by Draghi isn’t expected by many but a surprise cannot be ruled out. Should the ECB act with a new easing measure EUR/USD’s bear trend should resume. A quick test of the psychological 1.30 level is then probable.