EUR Trading Outlook (01-09-2014)

EUR/USD Europe rallied EUR/USD after EZ inflation data was basically inline with estimates. Short covering ensued and the pair lifted towards 1.3200 ahead of NY’s open. Anticipation of USD month-end sales likely aided the lift. NY had other thoughts on their minds though. They immediately pushed the pair lower even as US consumer spending data dented the USD a bit. The pair slid just below 1.3170. The slide look to have been aided by Goldman Sachs lowering their 3, 6 and 12 month EUR/USD f/c to 1.29, 1.25 and 1.20 respectively. Month-end USD sales did emerge into 11 a.m. hour but bears quickly took over and sold aggressively. they cleared the 1.3150 and ran stops below it. A new trend low was set for the pair. there was little relief as the pair sat just above 1.3136 late in the day. It appears traders won’t wait for ECB action to unload EUR. With BNP, RBS, Nomura and JPMorgan now expecting an ECB cut sentiment grows that some form of easing action will take place next week. A test of 1.3100 is likely pre-ECB. If that is cleared a quick run to 1.3000 may be in order.