April 29, 2014 Daily EUR/USD, GBP/USD Analysis
The move to the upside on the EUR/USD yesterday gave us a first long term push to the upside so I will finally have a clear bias on direction today. There is also two intraday pushes upward and with the way they have been running intraday pushes we may only see the third today before they turn and run the reversal. There is a significant daily level above at 1.3905 so the probability of at least testing that before a turn is good. Otherwise with the current situation seemingly getting better in the EU they may just break it to the upside running the long term pushes.
Not that I believe the picture is getting better in Europe but at least with the larger than expected repayment of the LTRO last week it at least gives the impression that the banks are doing better, even if its just a quick payback before they need much bigger chunk of cash for the next LTRO. We will have to wait and see. Super Mario says all is well and if history is the example then the possibility of things going south may be right around the corner.
Right now the best level to look for the long today is at 1.3841 or just a little lower if they want to hit stops below the lows during the US/London overlap yesterday. Otherwise if they run it up decently like its looking they will they may stop it a bit higher at the daily highs from Friday at 1.3847 which is also the Asian lows. There is a smaller chance that they run it as low as 1.3826 where the hourly 200 sits but I have my doubts they will if the conviction on direction is strong. I will be open for the short from the highs yesterday but if it gets there I would rather be long waiting for the break.
Speaking of conviction. How about that Asian fake conviction yesterday? Those moves are almost guaranteed to be false. I was waiting for the test of the Asian lows for an entry and it just shot off before it could do it. If any of our more aggressive members took the two pins to the hourly 200 and got their 40-50 pips, good job and I would love to hear about it.
The GBP/USD is in the same situation showing the first push upward with a little deeper pullback during the US session yesterday. I will have the same cautious bias for the long here as well. Right now the better level considering proximity to current price is 1.6791 but they may only run stops to the 1.6800 level before they turn it upward today. In that case I would prefer hitting the breakout traders to the Asian highs before hitting stops at 1.6800 but as long as price leaves the Asian box close to the highs I will consider a clear set up there. As with the Euro this is potentially a fake out upward so I will be open for the short at yesterdays highs if there is no entry long.
Forex News Today
The releases start early today with the Gfk German Consumer Climate along with German CPI data trickling in all day. If consumer data misses big we will probably get a pop on the Euro but most likely will be manipulation. The CPI shouldn’t do much considering inflation has been low across the EZ. Later is the UK GDP figures expecting an improvement. My thoughts are they will be close or even slightly better than expected considering all the good data from the UK lately. If it does miss to the downside then it will need to be bigger to create a sustained move.
The US only has CB Consumer Confidence expected to improve slightly. A big miss here could have a big impact but I expect it to be close as well. I see a miss to the upside as less probable but still possible.
The Asian session tomorrow is busy with Japan data so keep an eye on the Industrial production figures. As long as its not a big disappointment they will likely wait for the BOJ Press Conference later on.