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Forex Commentary EUR/USD, GBP/USD August 22, 2012

So where are we today on the EUR/USD? That is a darn good question and the pushes are unclear at best. I can find 3 intraday pushes up for 230 pips but have to start from the lows last Thursday we are starting to see a topping formation but its still not all to clear yet. We will have to wait to see what happens during the rest of the Asian session and start of London to get a clearer picture.

As I have mentioned before we should be expecting these tape bombs from Europe and we got our share yesterday with first an announcement that the Trioka is going to relax the austerity schedule for Greece. (Lies) That I couldnt find any report of this morning. Then there was Greece saying they are looking to cut 13 bil off their budget instead of the required 11 bil. You have got to be kidding right? How in the heck can they manage to add to billion of cuts when they are asking to have more time with a smaller amount. Thats just nuts. Anyway the way it looks to me is this push up was more of a USD weakness move rather than risk on. The reason is looking at the charts I use to gauge this (the USD/JPY and S&P 500) it would seem that during the London session the risk was on slightly but once London closed the S&P 500 tanked giving away all its gains plus some. Thats definitely not a risk on environment. So whats left is UDS weakness. We do have the fiscal cliff in sight a congress that cant get things together topping it off with a Presidential election. Things are just peachy right? (joke) Also i should also mention that Spain had a wonderful bond auction yesterday even as the ECB and Germans squashed any ideas that they will be buying Spanish or Italian debt. I think we may be back to bizarro world for now.

I will most likely be staying away from the EUR/USD today unless I see a clear stop run to the highs yesterday. The fact is the daily close broke out of this months highs and there is not significant daily resistance until we see around the 1.2680 level. the only chance we have for the short is a obvious stop run and it needs to be clean.

The GBP/USD showed the same USD weakness with a 100 pip move to the upside. the only way I can get some clarity on the pushes is to go back to August 10th of which I dont like doing since the smart money most often starts and finishes their plan over a few days rather than 12 days. However we are still in the summer doldrums so its possible considering the low volume we have had in the markets this year.

This will be the pair I look at closest today with a nice hourly stop run candle formed during the US session yesterday. This is not the typical hourly stop run I would trade because there is not a significant high or low its testing but I did put the two red lines on the chart to show a daily resistance area of about 50 pips that is a daily breakout from May. My concern is the daily close above the monthly high of June so I will want to see a clean stop run above or into the highs from yesterday to short. Otherwise we will be going up again today. To take a long I want to see the test down into the lows of the London session around 1.5750 with a trap move and I will be happy to ride this pair to new highs.

Forex News Today

There are no significant news releases for the London session today so be watching for the tape bombs yet again.

The US does have Existing Home Sales expected to rise and if it does come out as or better than expected there will be a bit more of the QE dream killed and should mean strength for the USD but they way the markets are running in bizarro style right now its may not.

Happy Trading


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