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FX Market Commentary EUR/USD, GBP/USD May 29, 2012

The move on the EUR/USD yesterday tells me there was not much desire to take stops above the 1.2626 level but with most of the banks on holiday yesterday the lack of their participation leaves a bit of a question as to if they will make another attempt. The fundamental picture only gets bleaker as the days go by so I am having my doubts to say the least. The Sunday gap has now fully closed with the move in Asia this morning and I will be treating this pair like there is no clear direction with a slight bias to the downside. This could very well be a first intraday push but with out a clear break and close below Fridays lows we are still working off intraday pushes. I will be looking for the manipulation to the upside during London and trap move to short from.

The GBP/USD has also managed to close its gap from yesterday and seems to be finding support for the time being. The fact that this pair couldnt make the push up yesterday keeps me in question on clear direction and I will be looking for the manipulation and trap move to trade this pair today. If the EUR/GBP gets a push to the downside along with the EUR/USD then the GBP will get held up somewhat. If I only look at yesterdays price action then I would consider that to be the stop run above Fridays highs with a topping formation so I do have a slight bias short but will be keeping an open mind at this time.

Forex News Today

We dont have much for high impact news today. Starting with German Prelim CPI. If this comes out as expected at a negative number it will show that inflation in Germany could be at a place where they might let the ECB lower interest rates. If we see a surprise drop then it will be an even higher probability and will be Euro negative.

Later from the UK is CBI Realized Sales and expected to drop again showing the consumers in the UK are not as optimistic. The impact of this will most likely be just an opportunity for manipulation and I will be looking for the set up beforehand and trade the manipulation afterward.

During the US session we have S&P/CS Composite-20 HPI expecting a smaller drop in house prices. I have my doubts this will move the market all that much until the figures actually start going positive. However the slow down in the drop in housing prices may be a clue that the housing market is bottoming especially if we see a surprise to the upside. Then an hour later there is CB Consumer Confidence which is expected to improve slightly showing consumers in the US are feeling better. If this does surprise to the upside then more decoupling will come into play and be USD positive.

Happy Trading


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