August 1, 2013 EUR/USD, GBP/USD Analysis
If anybody was not sure what the term whip saw meant we have a very clear example of it in the price action of the EUR/USD yesterday. Of course it was due to Bernanke and the Fed like I mentioned in yesterdays commentary. They just don’t get much better than that. It would seem that all the efforts Ben put into being unclear on what the Fed will do next has worked for now but I would have to say they really haven’t been able to remove the volatility like they want by teetering on the fence of “to taper or not to taper”. Expect more of this in the future until they actually fall on one side or the other. I expect either side of the fence will be causing some pain as there doesn’t seem to be a pretty landing pad anywhere in sight. Time will tell.
Considering this I will not be having a bias on direction today and will be looking for manipulation at key levels. Of which don’t look all that great either. The Asian lows this morning carry more weight due to the support in the region over the last several days but I would like to see this range widen out as they accumulate longs. Also seeing the playing of the breakout traders to the highs and knocking them out at the lows will increase the probability they will be making the push up today. If they don’t widen the range and push it down further I will be open for the long at the 1.3273 level but it will need to be clear trapping there since its right in the middle of the range. I will be open for the short also but the only good level I see is yesterdays highs at 1.3343 and frankly looking back on the daily chart its not that significant so if I am not already long I will want a clear stop run on the hourly chart along with the trapping patterns since if they do make the push up there it has a good chance of breaking and testing the overall daily highs above 1.3400 in coming days.
The GBP/USD made the third long term push yesterday and has gone into the third push chop within the last hours of the day. Considering that we may have already seen the reversal so its best to keep an open mind on this pair today also. It does already have a 37 pip Asian range so that opens up the possibility that we see them manipulating at the high or low of the range during London today so that is where I will be looking first.
Again the levels are not all that significant here so if there is nothing clear by way of seeing them play the breakout traders of the Asian range then Tuesdays lows at 1.5222 will be the next level I look for a possible short. The best place for a long is the lows yesterday but it does have a chance of turning at 1.5150 also. Having said that I will be cautious with the lows just behind at 1.5120.
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Forex News Today
The calendar is busy again today starting with Manufacturing PMI data from Italy, France, Germany and the Euro Zone. With the figures hovering around the 50 level these could surprise in either direction the way I see it. The main ones to watch will be Germany and the EZ data since if they drop below it will be Euro negative while if they tick up and by some miracle France and Italy pop above 50 then the Euro will most likely have a decent pop up. Having said that I would expect any small misses to be muted since we have Super Mario on the plate later on in the day. What will be interesting to see is if he opens the door on another LTRO like I have been hearing rumors of around my news sources. Should be interesting to say the least.
The UK also has their rate decision and more importantly Asset Purchases. All eyes will be an Carney watching to see if he will add to the BOE print festivities and even hinting on it will most likely send the GBP tumbling. Earlier there is the Manufacturing PMI data but with figures well above 50 right now it will take a large miss to create much movement today.
The US has Thursday Unemployment Claims but with Draghi starting his speech at the same time it will take a serious miss to see it get much attention. Later there is the ISM Manufacturing Index expected to have a nice jump to 52 and if it can manage to come out as expected or miss to the upside it should cause some USD strength while I would think it would need to miss hard and pop below 50 to cause much USD weakness.
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