EUR Trading Outlook (29-09-2014)

EUR/USD Europe held the pair to a relatively tight range as it appeared a quiet market was setting up into the weekend. EUR/USD bears were abruptly shaken from their slumber in early NY though. USD/JPY powered through the 109.10 levels and US bond yields saw a strong rally. Both rallies coincided with the announcement that Bond investor Bill Gross was leaving Pimco to join Janus Capital Group and had some traders attributing the rally to that event. EUR/USD dived from the 1.2745 area and didn’t let up until it hit 1.2679. A brief bout of USD weakness allowed a bounce above 1.2700 but USD strength returned (particularly vs. JPY) and EUR/USD slid to a new trend low of 1.2677. Very little bounce was seen and the pair sat near the low late in the day. Traders now turn their focus to German & EZ CPI readings and the ECB next week. Soft inflation data will put further pressure on EUR/USD. Traders likely look to sell rallies ahead of the ECB as market sentiment grows that the ECB’s current plans won’t expand their balance sheet enough and they may resort to QE. It’s unlikely the ECB will announce additional easing methods next week though.