April 17, 2013 EUR/USD, GBP/USD Analysis
After the price action we had on the EUR/USD yesterday it would surely seem that we have a clear direction and it is up. Having said that the move of over 170 pips concerns me as usual. Today my bias will be to the upside but the potential for a deeper pullback before it makes the push is high so I will be open for a short from yesterdays highs also. In order to take the short I would prefer the stop run above 1.3200 with clear manipulation patterns since my bias is for the long today.
Since the Asian range is pretty tight so far this morning the only way I will be considering the long from its lows is if price leaves the Asian box around the highs or close to them. Otherwise if price leaves at the lows of the Asian box the chance of them closing the inefficient move after the London close goes up significantly as they will probably want to push out some weak longs.
The levels I will be looking at are 1.3172, 1.3147 and 1.3137 for the long and 1.3200 for the short. If I do enter a short position I wont be holding for more than a 40- 50 pip pullback unless there is clear signals the support is not going to hold.
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The GBP/USD is in the same situation but also has a cleaner push for just over 100 pips so the potential for the deeper pullback is much lower. My bias is for the long but we could see the attempt to close the same inefficient move here too. The good thing is there are a couple levels within that move where price has good potential to hold. They are the Asia lows at 1.5351 as long as price leaves the box close to the highs. Which don’t look good right now. Next is the break out support at 1.5339 and 1.5328.
Forex News Today
The European calendar starts off with UK Unemployment data and at the same time the MPC Meeting Minutes are released so barring a large miss in Employment the Minutes will be what is looked at closest. If there is much change in the rhetoric then we will see some volatility. My thoughts are most likely GBP weakness if any mention of more asset purchases are spoke of. Any clues to the stopping or slowing of them will be GBP positive.
Later there is a German 10yr bond sale. The potential for it going bad is low but if yields rise substantially it could be bad for the Euro. My thoughts it will go off the same and most likely be a non event.
The US has a Fed Bullard speech and later a Rosengren speech so there could be some volatility during those. What does have me a little concerned was Yellen the uberdove in the club said yesterday the two statements below.
- *YELLEN SEES SIGNS `SOME PARTIES ARE REACHING FOR YIELD’
- *YELLEN SAYS LOW INTEREST RATES MAY PROMPT `TOO MUCH LEVERAGE’
This somewhat signals that the US may be rethinking the effects of the 85 billion a month and raises the potential of them stopping or slowing the printing press of which of course will make for some USD strength if it actually happens in the near future.
Late in the day is also the Fed Beige book release so be careful if you are in any positions at that time of day. Depending on how things are looking to the Fed members the market may do some pricing in of a halt to QE and the USD will spike on low volume.
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