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Daily EUR/USD, GBP/USD, EUR/JPY Analysis September 22, 2014


So much for a first push up on the EUR/USD on last Thursday. I had a sneaking suspicion it would be false since there is no fundamental reason to think the Euro should be strong. However that dont mean the big boys wont push it around to make traders think its going up just to turn it around and stop them out. Happens all the time. Just think of the JPY strength a while back as it kept getting strong with no real reason. The one good thing I can say about the EU is the ADR is now getting closer to the 90 pip range. Lets just hope it keeps up.

At this point I will have the bias for the short today. There is much more backing a move to the downside at now with the daily close below this months lows along with the probability of a test of 1.2766 the higher probability. The best level I see for the short is up at 1.2852 but the 1.2843 is valid. Its just a little too close to current price for comfort unless they hold and push it down during the Asian session this morning. Otherwise I will be open for the long from the lows but will need to see something rather convincing in order to override the short bias.

EU 1hr chart


The GBP/USD seems to still be feeling the volatility of the referendum vote with a 35 pip gap and 50 pip Asian range in the first hour of the day. This leaves me thinking they will be running this pair about for a few more days at least. Having a 127 pip ADR is good but does make us have to pay more attention to the better levels while still watching the less significant ones for turns as well. I admit I like when the potential for the move is big but it also means they have potential to turn at the lesser levels.

Today I will be bias for the short as well and right now the best level to see that is at 1.6335 as long as they hold it down during the Asian session. I will be watching for any conviction during London signaling they will test the 1.6366 to keep me out of a short early in the London session but if they do hold it down the Asia high has a good chance. If for some reason we see the conviction above 1.6335 during the Asian session I will wait to see it confirmed by London and consider a long, it will need to be a clear set up after the confirmation and will be treated as an aggressive trade due to the levels below being far away from my 20 pip stop. It seems as though any potential long from Fridays lows is off the table unless they turn it back soon. Its possible but I have my doubts.

GU 1hr chart


The EUR/JPY looks to be feeling the Euro weakness right now but still has potential for a move upward fallowing the USD/JPY test higher up to the 110.56 yearly high for the UJ in 2008. Right now the UJ is fighting September 2008 highs but they are less significant than the yearly they are likely to test. This should take the EUR/JPY with it to some degree even if the Euro is weak. It looks as though I might have missed the entry early on this morning but the time of day was too aggressive and the UJ wasn’t agreeing so I will wait and see if they will test back later and prove that was a trap and take the long from there. If that happens the UJ should agree and be at a better level as well. Otherwise there is potential for this first push down making another on Euro weakness so I am open for that as well having a slight bias on the push alone. The best level to consider a short is the Asian highs of 140.10 and would be best to see conviction on the EU or UJ to the downside backing the move as well.

EJ 1hr chart


Forex News Today

The news today during London is slow but gets busy during the NY session starting with a speech from Super Mario. I cant say I expect much from him other than something along the lines of they are using what they have and are ready to print any time. More or less the same dribble as before. Having said that there is a slight chance he slips and surprises but its rather small the way I see it. Later the US has Existing Home sales and two Fed member speeches as well. The housing data is expected to rise slightly but even though its showing as high impact this data has only created a sustained move on a big miss so barring that I dont expect much. The Fed speeches only have a chance to make them push if one or both show a change in contrast to what they have been holding in the past. The one that has a better chance is Kocherlakota the way I see it. With most data doing well from the US (excluding last week) he has a better chance to be a bit more hawkish than his normal dove stance. However last weeks releases do lessen that.  We will see.

Asian session traders have the Chinese HSBC Manufacturing PMI tomorrow. With it being so close to the 50 level and expecting a drop the chance for the miss below is bigger and will have a sizable impact on the Aussie crosses. Be careful on that one because a miss to the upside will have a comparable move just maybe not quite as big.

Happy Trading


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