Tuesday update

European open update:

• EUR/USD opened at 1.3041 today after overnight Wall Street and gold selling off hard;
• News of Boston marathon explosions accelerated risk-off;
• EUR/USD appears stuck between 1.2950-1.3150 with a bearish bias with risk aversion still prominent;
• With all of the attention on the JPY and "commodity currencies" - the EUR is sidelined waiting for fresh catalysts. The bearish outside day reversal yesterday suggests more downside and a test of support around 1.2990/95 looks probable.

Upcoming news & events:

• Data
• HICP for March
• ZEW index for the eurozone and Germany;
• IMF
• Global growth forecasts for the Eurozone to contract by 0.2% with global growth expected to rise by just 0.1%. 
• ECB
• Draghi to speak at 13.00GMT but is unlikely to make much in the way of new comments beyond those made at last week’s ECB meeting.
• Treasuries
• Auction focus comes from Spain, Greece and Belgium who all conduct bill sales. Attention will be on the Spanish sale of 6m and 12m bills.

Flows

• EUR/USD
• Offers 1.3100, 1.3120-30, 1.3145-65 res, Stops abv
• Stuck in 1.2950-1.3150 range, good bids from pre-1.3000.       
• Expiries == EUR 1.3080 and 1.3100
• Options == size seller noted 1 mth vol
• EUR/JPY
• bids 127.00, 126.70. 126.00-20; 
• Offers 127.80-00, 128.30, 128.50. Stops above

Strategy

• Stick with sell strength strategy although bear momentum is not that strong
• Fade rallies into 100-DMA 1.3152, daily cloud base 1.3168
• The 10 DMA at 1.3027, 200 HMA at 1.3035 continues to support the market.
• Citibank
• With investors willing to take risk off the table it seems that JPY and USD could remain supported for now. JPY could gain more ground also ahead of the G20 meeting on April 18-19 with investors concerned about growing international backlash against the recent aggressive BoJ easing...As times of market uncertainty the dollar should outperform other much less liquid currencies. If anything, we think that the dollar could lose more ground against the yen," Citi answers.
• "We think that both EUR and sterling could struggle to perform. Uncertainty about Cyprus and the Italian presidential election on April 18 could weigh on the single currency. In the case of sterling investors could opt to be more cautious ahead of the release of the BoE minutes on Wednesday," Citi adds.
• Deutsche Bank
• In the medium to long term though, DB advises clients to stay tactically bearish on EUR/USD given the expected big divergence between the economic performance of the US and Europe over the coming months."This works with the idea we are going through a consolidative phase, but the longer-term trend still favors USD gains," DB projects.