EUR Trading Outlook (03-12-2014)

EUR/USD Early Europe saw the pair hugging the 200-HMA. Bears emerged though as the USD went broadly bid on rising US bond yields. The pair slipped from near 1.2465 and sat just below 1.2440 into NY’s open. NY wasted no time in applying bear pressure. US yields added to gains and USD/JPY broke above 119.15 to have the USD bid across the board. EUR/USD slid lower with virtually no bounces as US-German yield spreads went further in the USD’s favor. The pair traded down to the 1.2375/80 area and saw little bounce as it held near there late in the day. Traders eye the 1.2350 barrier after the pair failed to hold above the 10 & 21-DMAs. The barrier may get a test if services PMI data from the EZ and China are soft. Should the barrier break another leg lower for EUR/USD is likely as the break means the recent consolidation phase is done. A test of weekly lows in the 1.2240/95 is then likely to ensue.