EUR Trading Outlook (30-10-2014)

EUR/USD An early dip to 1.2725 in Europe was bought. Risk sentiment was buoyed as equity markets & JPY crosses were firm. EUR/JPY rallied from 137.35/40 & aided EUR/USD’s lift towards 1.2745 into NY’s open. Bull pressure persisted in early NY as JPY crosses were well bid. EUR/USD’s lift got an extra boost after large options near 1.2700/25 were not close enough to pull the pair lower. USD sales then took hold post-expiry & EUR/USD spiked to a 1.2770 high. Action settled & light profit taking took hold as the market awaited the Fed. The Fed’s notes to labor resources gradually diminishing and the likelihood of inflation running persistently below 2% diminishing sent US yield and the USD soaring. EUR/USD was near 1.2740 pre-Fed & quickly hit a 1.2633 low afterwards. A slight bounce was seen & the pair sat just above 1.2645 late in the day. Bears are encouraged as a bear engulfing candle forms & the pair is back below the 10 & 21-DMAs. Daily lows at 1.2614 & 1.2605 are key s-t supports. Breaks open up a 1.2500 test.