EUR/USD, GBP/USD, EUR/JPY August 20, 2014 Analysis
The EUR/USD finally got a push breaking below the monthly range its been stuck in for almost three weeks now so today I will have a bias for the short. They did show the conviction early in the London session yesterday but there wasn’t anything clear to take the short from before the US news releases came out which was what caused the drop. Even though the probability was higher for the push down with it getting the daily close outside the triangle the set up didn’t happen.
At this point the best level to see them push from today is up at 1.3343 but the 1.3324 is valid as well. As most know, my issue with the lower level is the proximity to current price so they will either need to leave the Asian box at the lows and/or run the breakout traders to the lows before testing up to 1.3324 during the London session.
The GBP/USD also made a nice push to the downside when their CPI data disappointed yesterday. Considering they are seeing less inflation now, the probability for the BOE raising interest rates has literally gone through the floor. Now the next level they will most likely test is down at 1.6564. I will also have a bias for the short on this pair today looking at the 1.6638 daily level to be tested during the London session. I will be somewhat cautious since they could push to 1.6656 before a turn but since they didn’t try and push weak holders out before extending the move during the NY session yesterday the probability is lower for them to do the pullback today.
The EUR/JPY didn’t show anything significant yesterday remaining in the chop so I wont have a bias on this pair today. I did take the short from 137.12 this morning after the news releases on the nice set up at yesterdays highs. The GJ and UJ agreed even though the UJ did have an hourly close above yesterdays highs it has already tested the next significant daily level at 103.00 so as long as some risk aversion or Euro weakness kicks in this should be a good trade. Otherwise if I wasn’t already in I would be looking for the test of the Asia highs during London to short from while still open for the long from 136.84 since there is no clear direction on this pair.
Forex News Today
The calendar starts off with the BOE Meeting Minutes during the London session. I don’t really expect much from it other than confirming that they wont be raising rates any time soon. With the previous comments saying any rise will depend on data and wont be at historical norms Carney pretty much let the cat out of the bag. Considering the recent data there is a very slim chance of a rate rise in coming months.
Later the US has its FOMC Meeting Minutes as well so that could be interesting. Since they have been rather quiet on what they are thinking these days there is a decent chance for a surprise but I have my doubts. The big boys will probably be more tuned into what is going on in Jackson Hole over the next couple days.
Asian session traders need to watch out for the Chinese HSBC Manufacturing PMI data tomorrow. A big miss will have a sizable impact on the Aussie crosses.