EUR Trading Outlook (26-08-2014)

EUR/USD Europe and NY both made feeble attempts to rally EUR/USD off Asia’s low. The bounces were short lived as solid offers camped in the 1.3210/20 zone combined with a broad based USD bid were too much to overcome. A recovery in US bond yields from their lows allowed yield spreads to edge further in the USD’s favor. This aided in keeping bearish pressure on EUR/USD even after a well followed US bank’s tech team cut their EUR/USD short and flipped it to a long position. Late in the day the pair sat just above 1.3190 to se the pair down near 0.35% on the day. The risk of a squeeze does exist as day/week RSIs are o/s. However, they show no signs of diverging on the new trend low, so further losses cannot be ruled out. Big data risk later this week may see profit taking enter the mkt if no additional losses occur soon. The mkt will be keying on the EZ’s August CPI due Friday. A below f/c result should see spreads widen drastically and EUR/USD’s slide accelerate.