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Daily Forex Commentary EUR/USD, GBP/USD November 13, 2012

The price action on the EUR/USD was dull at best yesterday. I do still think we will see the next push to the downside but if we do get more of the same today I will be reconsidering the potential for a push to the upside. It is at a daily break out support level form July along with the psych level of 1.2700 so it doesn’t surprise me that the smart money would use this level as an opportunity to load up and try to push out weak holders that are short.

The levels I will be looking at for the short today will be the Asian box highs to begin with since we may just get the stop run there. My main reasoning is the rejection we had for both the Asian and London sessions yesterday. Of course the US was closed so we may see the move during the US session today but if that is the plan then they will hold these lows during the first 2 sessions and then most likely do a stop run to yesterdays highs of  1.2737. What would be a clear signal they have conviction to the downside earlier is an hourly close below Fridays low of 1.2688. Then the chance for the stop run only to the Asian highs has more probability.

The 1 hour chart of EUR/USD on Nov. 13, 2012

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The GBP/USD has ventured into a more unclear scenario with the small push down yesterday that came within 10 pips of the 1.5850 level I mentioned in yesterdays commentary. At this point I will be looking for that hourly close below yesterdays lows for a clearer sign they intend to push it down. If we do get the 1 hour stop run to the lows I will be willing to take the long but I do see it as higher risk. That would be high risk trade because the Euro could go for the third push down that would drag the Pound along with it more than likely. The level to watch for the short will be either the break out lows of Friday at 1.5885 or yesterdays highs of 1.5913 could be next. If we do get that hourly close below the lows then the Asian box high is in play, and I would look for a market manipulation entry there.

The 1 hour chart of the GBP/USD on Nov. 13, 2012

Forex News Today

Scheduled news releases pick up a bit today with a few that have potential. There is also the ECOFIN Meeting going on, however I dont expect much from it considering there was a fizzle with the Eurogroup Meetings yesterday. They have put off the decision on giving Greece the next wad of cash until next week in hopes that the Troika report is finished and Greece is actually doing what they promised. I am doubtful though because when the members of Parliaments crony support staff saw that they were going to get a cut in pay they put up such a fight that a group of them tried to cut power to the building to stop it. Check out the Reuters article here. It amazes me how every body knows there will be some pain in getting back on track but they all want it to be somebody else who feels the pain. Its no different in the US which is probably going to get interesting pretty quick.

The UK starts off with CPI y/y expected to rise. This probably wont have much effect as inflation data from the UK has been ignored due to the tolerance of higher inflation for the past couple years. What to watch will be the BOE Inflation Letter Gov King releases later. I will be looking for any clues that the asset Purchase facility may be pushing inflation higher but I have my doubts that will happen.

Later we have German ZEW Economic Sentiment that is expected to improve but still well into negative territory. If we do see the disappointment it will be Euro negative and that is a higher probability than a surprise improvement. There is also Euro Zone ZEW Economic Sentiment released at the same time so barring a large surprise there the German figures will take the spotlight.

Happy Trading


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