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June 5th 2014 Daily EUR/USD, GBP/USD Gold Analysis

Today is the big day for both the EUR/USD and the GBP/USD with both rate decisions coming from the BOE and ECB. At this point I expect this range to hold until the news announcements. Of course the ECB has the biggest probability of surprising because the expectations range from a full blown QE package (or at least LTRO to keep within its mandate) to a lowering of the interest rate to negative territory on at least one of its benchmark rates. To be honest I think they will do the least amount possible and go with zero on one of the lower end benchmark rates and do more talking about full blown QE. It just don’t seem there has been enough bad data from Germany to get them on board the QE train. Having said that there is a decent chance they do go negative on one or more of the rates so I will be watching out for that. The press conference will be most interesting and depending on what Mario says we could see some wild swings during that time.

With the range just tightening up a bit yesterday not much has changed again, other than yesterdays open becoming the best level for a short today. It is a riskier level with the other two just above so if I do get short there I will not be holding through the news if I don’t have the stop to break even yet. Other than that the 1.3589 is still best for a long but I still think the higher probability is for the break down since the ECB could use a weaker Euro.

EU 1hr chart

The GBP/USD has the same predicament pretty much but the probability of the BOE surprising is just about zero so there is the possibility of the effect from the ECB running the EUR/GBP nuts and the GU running to the upside is high. I will be a little more open for the long on this pair but again if I am not at break even with my stop by the time the ECB rates come out I will be closing. The levels here haven’t changed either other than the 1.6764 at the hourly 200 EMA being the best level to short from today. Again caution is warranted with the range high just above but there is quite a bit of confluence there.

GU 1hr chart


Gold seems to be in wait and see mode still as well. If the ECB goes full print mode then it just may pop up as gold priced in Euros drops along with the EUR/USD but I don’t think it will last long as they attempt to do another smack down before the physical seekers prop up price.

Gold 1hr chart

Forex News Today

Other than the BOE and ECB announcements the other news that could have an impact is German factory orders but it will need to drop below zero again. Even then it wont have an impact on what the ECB does today I think. Otherwise there is Euro Zone Retail Sales with the bar set pretty low so it will need a big drop below zero to think it would coerce the ECB as well. Im sure they have the data already so its possible but like I said they will most likely do what they can to weaken the Euro without going negative rates or full blown QE this time around. Keep in mind the last LTRO was done over the weekend to make sure several banks could open without filing bankruptcy the following Monday. That is not the case this time around. At least not that I know of but it surely is possible and will likely be the story next week once a few reporters look at the dirt if they do any sort of QE.

Happy trading


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