EUR/USD, GBP/USD Daily Analysis August 16, 2013
The EUR/USD had a clean fake out to the lows yesterday followed by the quick push up. I will be expecting the next push to the upside but with it being Friday and no news on tap for them to use to manipulate we may see a slow day ahead. What does concern me a bit is this move was not on a risk appetite scenario with equities taking a dive yesterday. The fact is there were a few things coming together yesterday that makes it look as though some of the big boys are losing faith in the USD. 10yr treasury yields rose, equities tanked, gold spiked on a worse than expected Philly Fed release? I have my doubts that was the only driver. Something else is brewing but its not wise to use one day of price movement to gauge the longer term sentiment so we will have to wait and see in the coming weeks.
The best level for a long will be the test of the 1.3310 area keeping in mind the daily high just above closer to the psych 1.3320 level. The 1.3331 daily low is significant also but I will want to see the test of yesterdays highs during Asia before I consider the long there due to the close proximity of current price.
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The GBP/USD has made 3 pushes over 2 days and the reversal has the best chance and considering Friday flows we should at least see a pullback. I would be happiest with a stop run to the highs due to the potential for only a 40-50 pip reversal before they go to extended pushes. The only reason I see they would do that is the weakness of the USD at this point. The likely hood of that happening today is low but possible after a pullback. There is also the fact that on the daily chart they closed beyond 1.5600 showing the probability they will run to the overall highs next week.
If I cant catch the reversal off the highs today I will look to take a potential long from the psych 1.5600 or just below at 1.5492.
Forex News Today
There is not any scheduled releases during the London session of note but the US has a few medium impact events that if they miss big will give them a reason to move and potentially manipulate. They are Building Permits, Housing Starts and Michigan Consumer Sentiment. All are expected to slightly improve so if they come out worse or as expected the USD weakness should continue while the miss to the upside on any may give them reason to manipulate down but I expect they will be closer to inline and will need a large miss upward to make any sustained move.
Have a great weekend
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