EUR Trading Outlook (27-08-2014)

EUR/USD Consolidation & a short squeeze threat was the theme o/n & that theme looked set to carry though NY. An early NY dip ~1.3185 was bought as US bond yields & USD were soft. The durable goods core reading was disappointing & aided the buyers. EUR/USD rallied towards 1.3210 & looked set to try a run for 1.3230 stops. The lift faltered though as sovereign sellers capped. A steady drift took hold & the pair neared the early NY low after US consumer confidence was well above estimates. EUR/USD bears that were looking to fade a bigger rally missed their chance much like they missed out on selling rallies in July. The USD began firming further & bond yields bounced to send EUR/USD through 1.3175/80. Stops were run and a new trend low of 1.3164 was hit. Very little bounce was seen and the pair sat near 1.3170 late in the day. Next week’s ECB meeting is gaining significance as mkt sentiment grows that Draghi may move sooner than expected. If Draghi acts it’s likely 1.3100 will be cleared and the psychological 1.30 level will be in play.