EUR Trading Outlook (04-12-2014)

EUR/USD The pair got smashed from the 1.2380 area towards 1.2320 in Europe’s morning on a combination of soft EZ services PMI and rising US yields. NY walked in with the pair sitting just off Europe’s low. Early action saw a lift to 1.2345 after the ADP and US labor costs come in on the soft side. The rally quickly faded though as the USD regained its composure on a resumption of the US yield rally. Europe’s low was cleared and the pair hit a 1.231 low. Large bids protecting a 1.2300 barrier prevented further losses but the bounce off the low was minimal. Late in the day the pair sat near 1.2310. The ECB is the big risk coming up. No new action is expected from the market and that may lead to a knee-jerk profit taking rally. A reaction like that is only an opportunity for those looking to get short do so. It is widely expected that Q1 will see new action from the ECB and that will keep EUR rallies limited at best.