Daily Analysis of EUR/USD, GBP/USD December 9, 2013
One would think that with a better than expected NFP and Unemployment Rate figures last Friday we should have seen some USD strength against the Euro. However what we got was the big fake out to the downside and a close right at the highs of the day and this mornings gap to the upside. There are two reasons why this is the case. One is that in order for jobs to really be recovering in the US, improving enough to make a difference, we will need to see around 300K jobs created per month and not the part time ones like we have been seeing so much of lately. The second is that the Unemployment data seeing a drop to 7% really don’t mean squat because in the fine print of the release the drop was most likely due to people losing benefits rather than finding jobs.
With everything based on if the Fed will print or taper we will likely see this sort of movement for some time to come. What seems to be happening is that they are finally convinced that the Fed cant taper the print fest and will more likely increase than decrease purchases. What is kind of funny is we all know the Euro Zone is hating the strong Euro. However the reason why Draghi will not say much about the exchange rate is that its not hurting Germany too bad yet and the overwhelming amount of the Feds purchases are going to bail out European banks. Talk about being between a rock and a hard place.
The price action on the Euro shows three long term pushes up so we should expect the reversal today. In order to take the short I will want to see the stop run to the highs at 1.3720 or the Asian range widen out a bit and then the clear trapping at the Asian highs. I will b keeping an open mind for a long here also. The reason is although there is some breakout resistance just above around 1.3735 the overall highs they have potential to test is much higher. The best level for a long is 1.3653 and if we see that price today then the 65 move from the highs may be all we see for the reversal and if I do catch the short I will be exiting just above there. I will only look for the long if I miss the short.
The GBP/USD made the reversal as expected on Friday running up just over 50 pips from the hourly 200ema before the wild whip saw we have to deal with now. At this point its best to keep an open mind on direction and look to take a long from the Asian lows or just a bit lower at 1.6317 while I will also be open for the short from 1.6361 or just a bit higher at 1.6369. Any entry at those levels long or short warrants some nice price action and caution since if they want to get the most stops they will run to the extremes of the range at the ends of the wicks formed during the NFP release.
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Forex News Today
The calendar is rather quiet today until we get some speeches later in the day starting with the BOE Carney having his say followed by two Fed member speeches a couple hours later. At this point the Carney speech will have the higher probability of creating a move depending on what he says. Otherwise the Fed Bullard Fisher and speeches may give some clues on what the Fed has planned but the transparency they have been pursuing has fallen off lately due in part to it really not helping the situation and really only seemed to show the Fed has no clue what they are doing and when they may do it.
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