Yellen’s Dovish Tone Sends Dollar Running – Daily FX Commentary 3/30/16
EUR/USD Gives Expected Break Higher
If you refer back to yesterday’s FX market analysis we were looking for the push to the upside. That point had been a recurring theme all through out the inverse trend channel we had forming the week prior. Today, with the help of Yellen, the EUR/USD made quite an impressive move to the upside. Regardless of trade direction I never would have been holding a trade into the Yellen speech as I pointed out yesterday. With that being said we did have a nice EUR/USD short from the stop run at the first upper level. This made a very strong push to the downside prior to the news and put the trade up around +30 pips at one point. The trade was ultimately closed out prior to the news for close to +10 pips. If we had not already started the push up I would consider this the first push to the upside but the start of the move calls the cycle into question. With that being said, I prefer to keep the market cycle bias open although the continued push up is more than likely the higher probability today as well. The big issue with catching a continued push up is we simply do not have any viable manipulation points that are close to the current price. Our one and only lower level to start the day is nearly 80 pips away. This does leave us with a lot of open room for a possible new level to form. To the upside I have 2 listed manipulation points, both of which are quite sizable.
Second Push Up On Pound
Yesterday we were looking for the second push to the upside which we very clearly got. For today I will be looking for the third push up which makes the analysis for the GBP/USD rather simple. If we are only looking for the third push to the upside then we will only be looking for lower manipulation points from which to see a stop run long. Much like the EUR/USD, the GBP/USD only has one lower level and it is a fair distance away too. This does leave a fair bit of room for a new lower level to form. Another nice option would be a backside long off of yesterday’s highs if we were to get a clean break and hold above them. This is a sizable level for a backside option and it has the support of being a psychological barrier as well which tends to attract liquidity thus supporting the level.
Forex Market News for March 30th 2016
US ADR Non-Farm Payroll 8:15 AM Eastern: This is one piece of US data that has still been a strong market mover on the spike. We have many examples of 15+ pip spikes in the last 9 months. Given the fact that this is at the beginning of the session it will very likely not conflict with a trade which is nice. This has a very mixed review of continued follow through in the direction of the release. Should the spike create a stop run I would not be afraid to trade against the release. This month 194.5K is the expected number.