EUR Trading Outlook (31-10-2014)

EUR/USD Europe made two tries to take the pair through 1.2560 even as econ data out of Europe was a bit upbeat. After the failed tries short covering lifted the pair near 1.2590 as NY walked in. Another try to break lower ensued on the GDP headline miss. EUR/USD spiked down to 1.2545 but T/P bids from those who shorted overnight prevented further losses. The slide then reversed after a second look was taken at GDP’s internals. They didn’t instill confidence that US rates should rise. US yields and the USD gave back the post-GDP gains and EUR/USD quickly recovered ground above 1.2600. Yields slid a bit more and the pair went on to hit a 1.2632 NY high. Some of the gains were given back after talk of a Nikkei report citing GPIF investment allocations sent USD/JPY soaring. EUR/USD slide from its NY high and sat near 1.2610 late in the day. Traders now look to the Oct. EZ CPI due tomorrow. A soft number should see bear pressure applied to EUR/USD. A big downside CPI miss is likely needed to see a serious test of key 1.2500 support.