EUR Trading Outlook (09-09-2014)

EUR/USD A tight range held for Asia and Europe and the pair sat just above 1.2950 into NY’s open. Some early pressure was put on the pair as it dipped to match the o/n low but no follow through had the market thinking further consolidation would remain. The pair couldn’t gains ground back above 1.2950 though as US bond yields firmed and USD/JPY broke above 105.30 and didn’t look back until it reached a 106.09 high. EUR/USD bears awoke from their slumber and didn’t want to miss an opportunity. The overnight low was broken and the pair then cleared last week’s low. Stops below 1.2920 were run. This lead to the pair making easy work of the 1.2900 level. Bears pushed the pair to a new trend low of 1.2882 before a bounce had the pair just above e1.2905 late in the day. A test of 1.2740/90 support is likely now that 1.2900 has been cleared. L-T charts show little support until that level while weekly RSI still is biased down and DE-US yield spreads continue to go further in the USD’s favor. There is no major data overnight so there is a possibility that stretched positioning may allow the pair to bounce before the l-t bear trend resumes.