Daily Analysis of EUR/USD, GBP/USD July 1, 2013
The EUR/USD today looks to be back in confusion mode so I will be treating it as the third push chop. I wouldn’t call that a failed second push on Friday but it surely looks like a failed attempt at one. Notice the nice three short term intraday pushes up starting from Thursday and then the slam down during the US session Friday retracing the full move. It would be nice if I could call that last move down a long term push but without a couple hourly closes below Thursdays low the best way to look at it is open for either direction. With the Independence Day holiday this week in the US and being Non Farm week there is a good chance we will see it remain in the chop barring some tape bombs that they use to make a push.
The levels are a little ugly with them being close together so the ones in close proximity to price I will be more cautious with unless I see them playing breakout traders at the high or low of the Asian range. My preferred level for a short is 1.3032 but I will want to see it push above the 1.3020 level during the Asian session which its looking like it might do here shortly. If there is nothing clear there I will wait for Thursdays highs at 1.3057. The best level for a long is the psych 1.3000 level since they seem to not want to let it pass there. However the entry will need to be clear with the lows last week just below at 1.2991 and 1.2984.
The GBP/USD had a nice clean third long term push Friday and I will expect the reversal today. I would prefer to see a stop run at the Friday lows of 1.5165 but with the Asian range rather tight so far this morning I have my doubts it will make it there. At this point I would like to see them push it up during the Asian session to somewhere close to the 1.5230 level before I consider the Asian range low as a significant level but they rarely do exactly as I want. If we see they play the breakout traders to the highs of the Asian range first I will consider a long at 1.5196 or just above but I will be watching for the hourly close below. If we get that it will most likely test the 1.5164 before the reversal or possibly continue down for an extended push.
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Forex News Today
The calendar today is littered with Manufacturing PMI data starting with Italy, France, Germany and the Euro Zone. Expectations are for flat figures across the board with the exception of Italy expecting a little move upwards. If these can manage an upside surprise there is a decent chance for some movement but I don’t expect much without a large miss in either direction. With the big boys more focused on whether the Fed is going to taper these events have become less significant.
The UK also has Manufacturing PMI data expecting a small rise. With the figures above the 50 level I am thinking a larger surprise to the upside will be needed for some decent movement while a pop below 50 will mean GBP weakness across the board.
The US also has Manufacturing PMI but with it being well above 50 it will need a big miss to do much. Later in the day is the ISM Manufacturing Index that is expected to get above 50. this will be significant if it manages to do it and will cause the sell off to continue. mainly because if there are clear signs of the US economy improving then the taper talk will continue or at least be on the minds of the big boys and the bubble in stocks caused by the Fed will see some more deflation.
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