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ECB Pulls Plug On Greek Bonds, Euro Tanks Feb. 5, 2015

ECB Showing Hand Early, Stops Funding Greek Banks Using Greek Bonds As Collateral

What a great way to show who is boss than to just cut all funding to Greece early. There is still about a week before this takes effect but the move by the ECB did make the Euro tank giving back all the gains from Tuesday. I expect these sort of moves will continue as we start to see the Greek response. In my mind the only option for Greece is to hit the door running and leave the Euro but at this point I dont think that will happen. Not yet anyway. The new Greek government was elected and see they have a mandate yes, however they were also thinking that they could stay in the Euro of which most Greeks want. Now that has changed with the way the Germans, ECB and EU have reacted. They are playing hardball even though they know Greece has a slim chance of ever recovering enough to pay the debt. Now the ball is in Greek hands and we will have to wait for their response. Interesting times ahead, what stuck out more when reading the news this morning was a comment to the article more or less saying, they may be testing the waters with a Greek exit but once it sets precedent and we see potential Portuguese, Italian or Spanish exits, that when the house of cards falls hard.

EUR/USD Gives Back All Tuesday Move

I have a feeling in the current market situation we wont be having clear direction until we see a conclusive decision on the Greeks staying or leaving the Euro. In order to stay they will need to bend over and take what ever the Troika wants to give them. Otherwise they will have to leave if they really want the debt write down the way it looks right now. The best level for a long today is 1.1312 but I will be watching the levels just below as well. The Asian range is already 40+ pips so its high is valid for the short but I prefer to see them push it up higher to 1.1361 where some daily highs sit otherwise I will wait for them to push up to 1.1399 potentially taking a backside entry long after conviction above the Asian range during the London session. However baring any news of a Greek concession this pair may just hold a lower end chop today.

EURUSD 1hr chart 2-5-2015

GBP/USD Third Push Up And Topping Formation

Although the GBP/USD has shown what we would expect for the reversal after the three pushes up yesterday the topping formation does add probability they may finish a first push down and drop below 1.5138 today. I wont be fully bias for the short but if Greece does show any conviction and the Euro Zone is hit harder than they expect, it will effect the UK as well and the USD strength will come back with a vengeance. The safest level to short is up at 1.5237 but I will be watching 1.5196 as well and would prefer to see them do a test during Asia this morning. Otherwise I will be open for the long from 1.5138 if there is no clear entry for the short.

GBPUSD 1hr chart 2-5-2015

EUR/JPY Gives Back Almost 300 Pips

Again there is nothing like the ECB playing hard ball to see the EUR/JPY move almost 600 pips over two days. I would consider it comical if I wasnt hit on my EJ long at the Asian lows yesterday. My first trade during Asia was hit break even and I also took the UJ long from 117.32 only to be hit break even as well. On to the next trade 🙂

I wont have a bias here either today but willing to short from the current Asian highs but the 133.00 psych level may hold it back if they manage a retest during London. Otherwise I am open for the long at 132.53 but leery of the levels just below. If there is no news of the Greeks folding then this pair should break the lows but I expect there will be on going talks long before the Greeks fold or decide to jump ship.

EURJPY 1hr chart 2-5-2015


Forex News Today

The calendar is slower today leading into NFP tomorrow. We do have German Factory Orders before the London open so that could get them stirring but barring a big miss they will likely be using it to make a sustained push. Next is UK housing data most probable a non event. Then later their Interest Rate and Asset Purchases again likely a non event unless they surprise for some reason, of which is doubtful with all the other things to consider these days.

The US has Thursday Unemployment Claims expected to rise to 290K. If it does pop above 300 then we may get some movement from it. With the layoffs starting to come in from the oil sector there is a decent chance for that.

Happy Trading




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