EUR Trading Outlook (05-11-2014)

EUR/USD A tight range held for Europe and NY’s morning. The pair lingered in a 1.2500/30 range as the market seemed content to wait for the ECB on Thursday & NFP on Friday. The pair sat near the lower end of the range when the market was abruptly shaken from its slumber on a Reuters exclusive story. The story noted that several national CBs in the Euro area will challenge Draghi’s leadership style on Wednesday. The source of the story noted that the CBs are angered that Draghi set a target for upping the ECB’s balance sheet as well as being secretive in his management style. The market took this story as a hurdle to further ECB easing. EUR/USD spiked up, ran stops above 1.2550 and hit a high of 1.2577. Action then settled quickly and some of those gains were given back after Europe’s close. Some squeeze risk remains as day/week RSIs haven’t confirmed recent lows and the weekly candle has a long lower wick in place. Further unwinding of shorts may push the squeeze until ECB & NFP risk is past. Until then the risk for a run above 1.2645 is extant.