EUR/USD, GBP/USD Daily Analysis February 19, 2014
The EUR/USD made a clean push up yesterday due to the USD weakness I mentioned kicking in. At this point I will be bias for the next push upward but with the possibility of this being a false push is there. It is creeping up on some very significant daily highs around 1.3800 so it will take some conviction to keep this pair pushing above there. The wild card here is the data from Germany yesterday was disappointing again showing that Europe is slowing and potentially being hurt by the strong Euro. This opens the door for Germany and the Bundesbank to all a sudden be more agreeable to the ECB going full print mode to help their economy and weaken the Euro. Shall we say at that point (which many think they will have to jump into at some point) the full blown currency war will be on.
The best level I see for a long to push up to the 1.3800 level from is 1.3723 but that does seem a little far away so I will also be watching the daily 1.3737 level also. Otherwise I will be open for the short with some clear trapping patterns to the Asian highs and prefer to see the breakout traders played to the Asian lows first.
The GBP/USD did make a clean attempt at the second push moving 87 pips to the downside so I will be bias for the next push down. However as I have been mentioning all too often lately is the bias in opposite directions for these pairs depends on the EUR/GBP making a large move which has been happening quite a bit lately but never something I want to depend on. Having said that the EG is in a second intraday push and has a higher probability of making the next push up. Considering that there is the possibility the EU and GU run opposite directions again today. It will depend on the conviction as to if the GU drops hard or EU rises.
The best level I see for the short on the GU today is at 1.6718. It has the confluence of the 20 psych level just above along with having been reacted to several times over the last few days. I will be open for the long if I miss the short but wont start considering it until the third push is finished around the 1.6621 level or lower at 1.6596 where the hourly 200 EMA sits.
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The calendar starts off today with UK Unemployment and the BOE Meeting Minutes released at the same time. Considering that the UK news has been for the most part good with the exception of yesterdays small miss on CPI data so there shouldn’t be any big surprises out of the Meeting Minutes but the Unemployment data has a chance. They are expecting it to drop another 20K so the chance for a disappointment is slightly higher but will most likely be close.
The US session starts off with housing data I don’t expect much from considering this data has been ignored for the most part lately. If there is a large miss then we may see something but with the Fed Meeting Minutes later it will need to be big. The Minutes have a good chance to push the market depending on what was discussed. If the taper talk has been fading then the USD will continue to weaken but from what I have seen Janet will stick to the taper guns for now anyway. Next months meeting should be more interesting.
For those Asian session traders out there we have Chinese HSBC Manufacturing PMI data early tomorrow. This is about the only half way reliable figure from Chinese data and if it misses to the downside then it will effect the AUD and Kiwi to some extent. If it can manage to pop above 50 then it will be good mostly for the Aussie but the Kiwi will benefit somewhat too.
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