EUR Trading Outlook (23-09-2014)

EUR/USD Europe capped the rally begun in Asia just short of 1.2870. they pushed the pair below 1.2835 before it bounced near 1.2840 into NY’s open. NY pushed the pair briefly above 1.2855 a US bond yields were soft early but leveraged sellers sat there and capped the rally. Draghi’s statement to the Committee on Economic & Monetary Affairs of the EP was dovish. He noted that the ‘economic recovery in the Euro area is losing momentum’-DJN while also noting that ‘the exchange rate isn’t a policy target, but it’s very important for price stability’-RTRS. EUR/USD dived to a new trend low of 1.2816. Bids into the 1.2800 barrier prevented further losses and the pair then bounced as NY’s afternoon saw some USD weakness. Late in the session the pair sat just below 1.2840 and up near 0.10% for the day. Risks for a short squeeze are upped after the new low was set and the pair then closing up on the day. Bolstering the view of upped squeeze risks are diverging daily & weekly RSIs and narrowing yield spreads. Unless the pair can crack 1.2800 soon we may see s-t bears cover and the pair take a look near 1.3000.