EUR Trading Outlook (03-09-2014)

EUR/USD Europe pushed EUR/USD to a new trend low as it reached 1.3110. The pair sat just above that low as NY got going. Further losses weren’t possible during NY hours even as the USD mounted serious gains vs. other major ccys. Short covering in many EUR crosses and JPY weakness combined with solid EUR/USD bids sitting 1.3110-10 to see EUR/USD lift slowly from the lows. Above f/c August ISM data allowed a small slip but the rise persisted. The lift stalled just ahead of 1.3135 though as offers touted in the 1.3135/45 loomed and EUR/JPY’s rally fizzled out. Late in the day EUR/USD sat just above 1.3125. The trend remains bearish but short squeeze risk is extant. Traders may lighten up on large short positions that have been built recently. The ECB is due Thursday and the market seems to have priced in action by the bank. Some of that positioning may get unwound ahead of the meeting. Stops are touted above 1.3140/45 and may come into play if the pair can’t break below today’s low soon.