EUR/USD, GBP/USD April 30, 2014 Daily Analysis
The move on the EUR/USD yesterday does show the first push up was false so now I will be having a bias for the short today. Since the CPI data from Germany showed deflation rather than inflation for the second time this year with a worse than expected release. The word on the street I expect would be that now Germany and the Bundesbank will be open for full blown QE from the ECB. This is just the sort of data that has the ability to change the mind of Jens Weidmann. At this point they shouldn’t have much work to do on that front since he has already said that he’s open to it as long as it fits the ECB mandate. Just that alone is almost a 180 degree turn from the Bundesbank stance on printing money. Keep in mind the previous head of the Buba (who was first in line to take over the ECB when Trichet’s term was up) quit and walked away from that because of the first LTRO he didn’t agree with. The Bundesbank is close and now the data from Germany is starting to pile up and this little side show going on with sanctions on Russia has potential to hurt Germany even worse.
The best level I see to see manipulation for the short today is up at the hourly 200. There is a daily low just below that at 1.3826 that may hold it as if it takes some time to reach there the 200 will drop slightly also. Having said that there are two other possibilities. One is we see these daily lows from Monday hold like they have been during the Asian session. If they do and we get the conviction below the four hour 200 then I will consider the 1.3841 a potential level to short. Lastly there is a smaller chance that they try and close the inefficient move on the news yesterday and run it as high as 1.3841. The probability for the long is low the way I see it so it will take quite a bit to change my bias at the lows.
The movement on the GBP/USD yesterday shows they aren’t committed to the move up either but also not showing anything saying they will push it down. The UK GDP figures were a disappointment but I doubt its enough to make them push it south. Having said that it did seem that they were thinking the same thing I was and the probability for a surprise to the upside was much better than a disappointment.
Right now price is almost exactly 21 pips from the best two levels to see manipulation today with 1.6844 for the potential short or 1.6802 for the long. otherwise if there is nothing clear at those levels they may push it to yesterdays lows of 1.6791 or the recent highs of 1.6856.
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Forex News Today
The calendar starts off with Retail Sales and a little later Unemployment data from Germany. My thoughts are the Retail Sales will have the higher impact but if either miss big to the downside they will likely start the next push down at that time. However the bigger release will be the Euro Zone CPI data. If this disappoints like Germany did yesterday then the next push will definitely go. Especially if it dips below zero showing what they are most concerned about at the ECB which is deflation.
During the US session there is ADP Nonfarm along with US GDP data fifteen minutes later. As long as the ADP figures are close they will wait for the GDP to see if it deviates from expectations. With the bar set pretty low I expect a miss to the upside has a better probability but with no real good data coming from the US lately there is the possibility of a disappointment. The Chicago PMI data should only cause waves on a big miss which is unlikely the way I see it. Late in the day while I am sleeping the FOMC has their moment in the spotlight and if I am in a trade I will be closing if I am not at break even, if I am I will move my take profit far away from current price and check it when I get up.
There is also GDP data from Canada for those Loonie traders out there.
My apologies to the Asian session traders yesterday. I missed the Japan Industrial production and PMI releases and the BOJ press conference is later at the close of the Asian session today. My bad 🙂
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