Daily Analysis of EUR/USD, GBP/USD September 30, 2013
We start the week with the Euro getting smashed across the board due to a few things happening over the weekend. The US has the coming government shut down being a small factor for now along with turmoil in Italy and Greece being the main factors. If the US can pull a rabbit out of their hat it might help somewhat but the way Europe is looking at the moment the Euro will continue to weaken. They probably want it that way with the EUR/USD at these levels but the means at which they are weakening it does seem strange. There may be more events coming up since the Italian story is far from over. I also have a feeling the US situation wont go away any time soon either so the EU will probably be acting a bit strange in coming days.
Having said that my first expectation is the 30+ pip gap will close at least to the 1.3514 level but so far it seems that the conviction to the downside is holding during the Asian session with the psych 1.3500 holding well. Therefore we may only get the stop run above there before the continuation. If price leaves the Asian box close to its highs they will probably run it higher but the closer to the lows it is the higher the chance we only get the stop run above the Asian highs.
Again with the US having its own problems this pair also has a good chance of staying in this range so the long from around 1.3471 or just below around 1.3463 has most likely higher probability than a break down below the lows today. If I do get in a long position I will be taking the profit between 40 and 50 pips expecting the range to hold. The hourly 200 is also hanging around those lows which gives some confluence for the long also.
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The GBP/USD is showing some strength this morning testing over all highs at 1.6167 which in indicative of the USD and Euro getting weak at the same time so this will be the pair I watch closest today. Since it does have three pushes to the upside the reversal has the highest probability but if it does run around 50 pips from the highs to 1.6133 or even better the 1.6320 level I will consider a long with the GBP strength. Otherwise I will be looking to short from a stop run to the highs looking to see the run for around 50 pips on the reversal.
If we get the conviction above the highs during the London session I will long for the long around Fridays highs.
Forex News Today
The calendar looks rather busy today but all the scheduled releases are low impact other than European CPI data and US Chicago PMI figures. Considering this the chance that we get more manipulation worthy tape bombs from either direction has a higher probability. So I will be keeping an eye out for that today. There is the chance a large miss on the two events mentioned will move the big boys so I will still be cautious around those times.
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