The EUR/USD has proven to be in wait and see mode while other things still stir such as the downgrade of France, Portugal craziness and the EFSF fund getting its downgrade also. It sure seems as though everything is riding on Bernankes shoulders this week. With a potential mutiny at the Fed going on having half the members disagreeing with ben its questionable what he will actually say when he testifies tomorrow and Thursday.
My guess is he will reiterate what he has said in the past but you never know he may just grow a pair and drop the ball on congresses head and tell them they “are the only real game in town”. He has a good chance of leaving at the end of his term and doing something to that effect will surely make Obummer not ask him back. Most likely nominating the next QE genius in Janet Yellen. At this point its merely a guess and I expect the big boys to act in the same manner until Ben has his day in the spotlight.
I should also point out that while the London session has been selling the NY session is buying. There is still no conviction but with Retail Sales missing more than I expected yesterday in the US the chance for Ben actually increasing QE has risen and pushed equities to new highs yet again. It is as though there is some confusion in the minds of the big banks as where to go next.
Therefore again today will best traded at the extremes. With price currently closer to yesterdays highs the probability for the manipulation up and eventual short looks better. However the levels are not so great since it could take place at Mondays highs, Fridays highs around the psych 1.3100 or even potentially the 1.3120 level. I will be cautious and waiting to see the clear set up and if they cant manage to open up the Asian range I will want to see them play the breakout traders to the Asian box lows before I consider a short from the lower levels. I will be open for the long also but only at the lows around 1.3000 and the probability is we again see the push up during the US session rather than London. I know I always say they never do the same thing twice but in this case with no conviction and the Bernanke testimony tomorrow it does have a higher chance.
The GBP/USD has what I would normally consider either the first long term push down or second intraday push. At this point I think the safer way to treat it is a smaller bias for the next push down considering the close was closer to the high of price action yesterday. I do expect the next push down but will be open for a long from the lows during the US session if I cant get in the short during London today.
The level I would prefer for the short is around 1.5128 but with the 20 level just below showing some good resistance it may not make it that high. If they do push it off from around the 20 level I will want to see the stop run and at least an attempt at the 1.5128 unless they play the breakout traders at the lows of the Asian range first. The 1.5080 level has potential for the long but is rather risky being in the middle of yesterdays price action and as with the Euro it will be safer to see the stop run to the lows at 1.5026 during the US session.
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Forex News Today
The scheduled releases are busier today starting with CPI data from the UK. Expectations are for an increase to 3% and given they have been tolerating higher inflation for quite some time I don’t expect much unless it misses big in either direction. The fun one later will be when Carney gives his inflation report. That should be good to say the least.
Later is the German and EZ ZEW Economic Sentiment figures with both expected to rise. I cant understand why but that’s what they are. My thoughts are that there is a bigger chance for the miss to the downside but we will have to wait and see. There will most likely be a reaction on a misses either direction but how far they let it go before Bernanke testifies is questionable.
The US has TIC Long Term Purchases when we find out just how much faith foreigners have in US bonds. If this manages to be negative it could easily make longer term interest rates move as they sell even more US Treasuries but we all know the Fed will take up the slack so the potential for a non event is higher.
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