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Daily Analysis of EUR/USD, GBP/USD April 24, 2014

We finally have a first push on the EUR/USD to the upside yesterday. However it seems that they didn’t have enough conviction to keep the daily close above either of the two previous daily highs. This leaves some doubt in my mind that they will be doing the second push today. The data releases yesterday were mixed with France disappointing while Germany had much better than expected figures making the EUR/GBP go a little wild blowing out its average daily range along with having the daily close above it. On top of that the US housing data was a major disappointment seemingly throwing risk right out the window at the end of the day. Having said that I would have expected the JPY crosses to follow suit which they did not.

I will have the small bias for the next push up today on the EU but with the way they dropped it during the NY session yesterday the best level is down at 1.3800 where yesterdays lows are. I will consider the 1.3812 level also but since it is so close to current price I want to see them push up a bit during the Asian session before hitting stops below 1.3812 during London today. I will be open for the short but the best level is at the daily high of 1.3850 where it stopped yesterday. The only way I will consider the lower levels of 1.3824 or 1.3835 is if we see conviction below 1.3812 during London that don’t run close to 1.3800. Since they are only 12 pips away from each other the potential for a stop run hitting 1.3800 is good. Just as a reminder the hourly conviction mainly tells us they will test the next level.

EU 1hr chart

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The GBP/USD will be my preferred pair to trade today. Since we have a first push down showing more solid conviction along with the potential that we are getting the Asian fake out this morning. I will prefer to see them push it up to test 1.6796 or 1.6800 during the London session but if they wont do that and run it down from here blowing past the one hour 200 then I will consider a clear stop run above the Asian highs for the short. It would be best to see them play the break out traders to the Asian lows as well but not required if they widen the Asian range over 20 pips. If there is no clear set up to take the short I am open to a long from the lows yesterday but if I miss a good entry short  will most likely let it go and wait for a continuation entry during the NY session.

GU 1hr chart

Forex News Today

The calendar during the London session only has German IFO Business Climate, Expectations and Current Assessment today. With two of the three expected to drop and the better than expected data yesterday. The probability of an upward surprise is good. If this does happen we will likely see the EUR/GBP do somewhat of the same move and the GU will drop while the EU stays steady or rises.

At the start of the NY session Super Mario has a speech and he could do anything. There is a good chance he will try to verbally weaken the Euro but with better data coming from Germany most of the pressure should be off unless he pulls off his blinders and realizes that the rest of Europe desperately needs a weaker Euro. I have my doubts but its possible.

The US has Durable Goods data likely to disappoint considering the nasty New Home sales release yesterday. The reason is a sizeable chunk of the durable goods are household appliances. Therefore if no one is buying new homes then they are not buying new appliances either. What does have potential to throw that off are new car sales. Having said that if it don’t miss big then they will most likely still be digesting Super Marios remarks and will push off that depending on what he says. Of course there is Thursday Unemployment Claims but it will also need a large miss to trump Draghi.

The Asian session tomorrow has Japan CPI data expected to jump significantly. If it does then the JPY should strengthen. Not necessarily a good thing for Japan but at least they have some inflation.

Happy Trading

Chad

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