EUR Trading Outlook (30-09-2014)

EUR/USD Broad based USD weakness (particularly vs. JPY) in Europe initiated a profit taking short squeeze that had EUR/USD near 1.2690 into NY’s open. The lift continued as German Sep. HICP came in above f/c, USD weakness persisted in early NY and soft US yields offered no help the USD bulls. EUR/USD rallied to a session high of 1.2715. Resting offers from Asian names capped the rally and a recovery for the USD aided to push EUR/USD briefly below 1.2680. Dovish comments from the Fed’s Evans and his note of USD strength being taken into account on the affects of trade & inflation combined with a soft US pending home sales number to send EUR/USD higher once again. The pair traded above 1.2713 but bulls ran out of gas as the USD staged a recovery. Late in the day the pair sat just above 1.2690. Traders now look to German Aug retails sales & Sep unemployment data as well as EZ Sep CPI for cue tomorrow. Weak results will weigh on EUR. If the results are slightly upbeat a short squeeze might ensue but l-t bears likely fade any rallies as the mkt sees the ECB adding more easing measures soon.