Daily EUR/USD, GBP/USD Analysis February 6, 2014
The EUR/USD remained in no mans land yesterday leaving the question of direction open again today. Having the US ADP Nonfarm figures disappoint even with the bar set rather low. Of course as I mentioned in yesterdays commentary there was no reason to think the job market is improving in the US and companies like Radio Shack, Sears and JCPenny are letting employees go while closing stores. The NFP figures on Friday have a good chance of doing the same but the prospect of this did not send the EU running up with conviction and seems as though this hasn’t had the non taper effect some would have thought. The most probable reason for this is most likely the reports I have been seeing that the Fed is getting more concerned about its balance sheet. With a 300% rise in the last 4 years they should be concerned but as many believe, and I have to agree its is more than likely too late and the damage has been done. In short when the market takes over not only will they not be able to unwind it fast enough but will be insolvent along with the rest of the wests central banks. Max Keiser covers why here.
Since I have no bias on direction today and we have substantial news they will most likely chop around yet again until the release again. Having said that the best level for the short are 1.3537 but they may run it as high as 1.3554. The best level for the long is again the 1.3500 psych level but with a couple levels right below it, if they break down it could stop at either of them.
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The GBP/USD is in the same situation remaining in the chop for two days now. Again seriously doubt they will make any sort of conviction move before the ECB Press Conference today and the levels didn’t move much. The 1.6339 level is the best place to short while the daily 1.6289 is still valid for a long. Any entry there will be aggressive so if the set up is not perfect then they will probably move it down to 1.6256 The problem is the two breaks of the level over the last two days making it a weaker level at this point. What it does have going for it is the fact that stops were ran below the 1.6256 level yesterday so if they do want to run it up the probability they will need more stops below the lows is much less.
Forex News Today
The major release is the ECB Press Conference which I am pretty sure they will be waiting for. There is a also the BOE Interest Rate and Asset Purchases but wont do much unless they lower the purchases. Considering the improvements seen in the UK as of late there is a small chance but I have my doubts and expectations are for them to remain steady. There is the German factory Orders that could create some movement an hour before the BOE release but with expectations at .04 my thoughts are it will have to drop below zero to do much or need a big surprise upward.
Lastly the US has Thursday Unemployment Claims but will most likely get ignored barring a large miss and even then will likely be over shadowed by Mario Draghi.
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