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EUR/USD, GBP/USD Forex Daily Commentary June 6, 2012

As I look at the market this morning I was happy to see that I didnt get stopped out of my long EUR/USD position I took in the live room session and now it seems poised to hit my TP at 1.2490 but since we do have the hourly 200EMA in the way I just manually closed it at 2485. As I stated in the June 5 commentary I was expecting the 3rd push to the upside after a decent pullback during London. What I didnt expect was the pullback to be well over 100 pips. We did have a few members take advantage of the drop on more aggressive entries and one member gained over 300 pips on multiple positions trading the EUR/USD and EUR/AUD. Good job Wally.

Today direction is a bit more up in the air considering that drop we had yesterday and since we do have the ECB rate decision later on today with expectations of more LTRO or at least talk of doing something in the near future. So the probability of more upside is there but I am not counting on it. For the most part I would like to see the manipulation around yesterdays high to short or a trap move to the downside to go long today.

The GBP/USD is showing a slight more bias to the upside with the 10+ pip push that has cleared and had an hourly close above the highs from Monday and Tuesday. I am not counting the highs from Friday as they were due to NFP so even though the bias is to the upside we do have the possibility for the deeper pullback. I will be looking more for the manipulation at key levels to trade this pair today. For a long I would like to see the manipulation happen at yesterdays high and if I do consider the short it will be from the manipulation zone around 25 pips outside the Asian range highs.

Forex News Today

Scheduled releases start with Construction PMI from the UK that is expected to drop and with not much from the UK regarding good news I expect if there is a surprise it will be to the downside but the higher probability is closer to inline.

The Euro Zone starts off with German Industrial Production and is expected to go into negative territory. If this does drop more than expected there will be thoughts of the ECB acting sooner as Germany shows that its feeling the heat of all the austerity they prescribed for the EZ and are slowing down along with them and may loosen their grip on the ECB. later is theall important rate decision from the ECB. There is a slight possibility that they do a surprise cut but most people doubt that will happen and I agree. Later during the Press Conference is where I expect the movement to heat up. Draghi will at least have to admit things are going south and hint at the rate cut if he dont announce more LTRO. Of course the hint will be Euro nagative but any announcement of LTRO will most likely trump that and the EUR/USD will rise on the Draghi buying more time for the countries with banks in trouble like Spain and Italy. I do expect this to be a short lived push up but has potential to last for a week or more.

From the US we have a couple members of the Fed speaking along with  Revised Nonfarm Productivity. My thoughts are that the Nonfarf figures will be trumped by Fed member Lockart speaking twice and  Tarullo once. The issue at hand is the fact of a more dovish tone stating anything about more QE in the future as most every article I have seen has just about made it a foregone conclusion. I am not so sure for the reasons I stated in previous commentaries but predicting what Ben does is something I dont venture into.

Happy Trading



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