EUR Trading Outlook (02-10-2014)

EUR/USD was in consolidation mode for Europe & NY as the market awaits the ECB. Europe pusehd the pair to s-t support near 1.2585 into NY’s open. The pair looked set to make more losses as ADP beat forecasts but the pair rallied shortly after the data. US bond yield saw a big slide after the data and the USD went broadly offered. EUR/USD ralied to a 1.2640 high. No further gains were possible though. Weak equirty markets combined with JPY strength to send EUR/JPY crashing though 137.95. It eventually hit a 137.62 low. EUR/USD was dragged from its high and hit 1.2590. The slide ran out of steam though and the pair bounced to sit just above 1.2605 late in the day. Traders now look to the ECB to for the details of ABS & covered bond buys. Some trades might be looking for additional measures to be announced from the ECB after GErman and EZ PMIs were soft today while soft inflation data early in the week suggest deflation or larger disinflation may become a bigger issue for the zone. EUR/USD remains a sell on rallies for now.