EUR Trading Outlook (26-09-2014)

EUR/USD Europe crushed EUR/USD from the 1.2770 area down to 1.2696. A combination of German Fin Min Schaueble comments on the prospects of ECB buying securitised loans and covered bonds and very large EUR sales by a UK clearer were the drivers. A bounce off the lows had the pair near 1.2725 into NY’s open. An early dip due to better than f/c jobless claims saw 1.2710 tested. The dip was quickly erased as large USD sales (predominantly vs JPY) saw EUR/USD rally to 1.2765. No one point cold be attributed for the USD sales but talk of the GPIF decision being delayed and a Moscow Times story reporting that a draft law allowing Russia to seize foreign assets due to sanctions may have been part of the reason. The pair pulled back from NY’s high as the USD recovered a bit in the afternoon and the pair sat just above 1.2745 late in the day. Bears have full control of this pair as sentiment grows the ECB will have to do more to expand their balance sheet. A test of structural support in the 1.2650/60 area looks likely as the mkt looks to get short still. Sub-1.2650 eyes 1.2465/00.