EUR/USD, GBP/USD, EUR/JPY Daily Analysis August 28, 2014
The EUR/USD managed to finish the third push during the Asian session yesterday for some false conviction before making the reversal so today I will be open on direction with a small bias for the next push up due to the intraday push it made on the reversal. I would prefer to see conviction with that push in order to have a stronger bias since this daily level at 1.3206 has good potential of holding it down. In yesterdays commentary I mentioned that if the German data was bad that it would likely have a positive effect on the Euro since the chance for earlier ECB QE comes into the picture. Sure enough, the data wasn’t just disappointing but they also revised the last print down as well, making the scene even worse for Europe as Germany shows more signs of getting hit. I’m not so sure this will last even if they start a QE program at the ECB but the Euro will get a bump. The question is how far are they willing to push it considering bond yield spreads are at historic lows and just what will the ECB buy thinking it will spur growth. Should be interesting.
The safest level for a long today is down at 1.3155 while the 1.3171 and 1.3185 are valid but carry much more risk in what is essentially a third push chop. The only way I would consider the 1.3185 is with conviction above 1.3213 during London today. Otherwise the best short is still at 1.3206 while being cautious if they want to run stops above 1.3213.
The GBP/USD is still stuck in the range its been in for the last five days so not much has changed other than a little movement on the levels. The 1.6598 being the best short if they don’t want to run stops above yesterdays highs and considering they hit stops above the highs of the range yesterday the probability has gone down they will do it again so I will be open for a short a bit lower in the range of all the recent daily highs but the set up and entry will need to be good just in case they do run stops again. Otherwise the best level to take any long is at the lows of 1.6537. The 1.6558 and 1.6545 are valid but much more risky with no clear direction.
The EUR/JPY finished of its third push and made the reversal yesterday on the end of day pump from the US while they held equities close to their all time highs. At this point I wont have a bias on this pair and open for either direction today. It don’t look like its going to give me anything during the Asian session so if it can test the lows during London I will be open for the long at 136.80 but if they do run it down decently this morning then run stops to the Asian highs during London I will be open for the short after seeing their typical tricks and hold to see if they are willing to break the lows.
Forex News Today
The calendar during the London session is slow on higher impact data but there is a lot of low impact releases that could stir things up if most of them miss big. The one that has a better chance of giving them reason to push is German Unemployment. I have my doubts it will miss very big this release since the bad data hasn’t been piling up yet but its possible. Otherwise there is also German CPI data just as the US session opens. If that drops enough to cause deflation fears then the EU will likely rise again as they think the Bundesbank will jump on board the QE train sooner rather than later.
Thirty minutes later the US has its Thursday Unemployment Claims and GDP released at the same time. Either of these have potential for a decent miss but will take both deviating good or bad to get much USD strength or weakness. If one is bad while the other good then they will likely offset each other unless the miss is really big on one and not the other. Later the Pending Home Sales is expected to get above zero and if it manages to do so they may move the USD while any print below zero should be negative.
The Asian session tomorrow has a bunch of Japanese data to watch out for. The Industrial Production and Retail Sales are what I consider most important but if the Household Spending misses really big while the others are close they will move on that.
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