EUR Trading Outlook (11-03-2015)

EUR/USD Bears pushed EUR/USD below 1.0750 in Europe on fears of Greece’s ability or willingness to pay debts and broad based USD strength. NY walked in with the pair slightly off the lows. Early NY saw a lift above 1.0790 as USD/JPY fall from the 122.04 high brought on general USD weakness. EUR/USD’s gains evaporated though. The USD’s slide abated and general risk-off sentiment took hold. Soft US equities and bond yield combined with a strong JPY to push EUR/JPY down below 129.50. This dragged EUR/USD lower from NY’s high and towards 1.0690.Little lift from the low was seen as the pair sat just off the low late in the day. Bears are in control after a brief pause yesterday. Bear biased RSIs and widening yield spreads aid their cause. The clean break below the Sep 2003 low now have bears targeting the 1.0500 area where the Dec 202 high and March 2003 low sit. Longer-term bears are now taking about a move to parity as well. Upcoming risks today are China’s retail sales and Draghi’s speech to the Center for Financial Studies in Frankfurt Germany.

USD/JPY The 122.04 multi-year high scored in Asia was followed by a few more futile attempts to run past Japanese exporter and other offers by the figure. This wasn’t surprising given the intraday tumble in Tsy-JGB yield spreads and equity prices that began just before the high was scored. Japanese pensions, likely led by GPIF, appeared to leave their fingerprints as JGB yields climbed again, but this time there was not offsetting rise in stocks, there or here, just more Tsy buying. The latter was from all corners and has thus far managed to keep USD/JPY atop its hourly Cloud, even though 121 was breach in NorAm trading. More support is by 120.60 and 120.40. A potential bigger threat to USD/JPY’s uptrend is today’s N225 futures break below the uptrend from Jan lows. Between that, rising JGB yields and the big downward revision to Q4 GDP, the mkt will rumble louder for BOJ QQE3 this spring, rather than in H2 as had previously been the consensus. Grexit, Corinthia, France’s 2-yr fiscal target can-kick and ECB QE took EUR/JPY to new trend lows and below 130. Daily & monthly tech targets are by 128.50. JPY Corp Prices & Machine Ords are out tonight.