Daily EUR/USD, GBP/USD Analysis March 5, 2013
This morning as I look at the EUR/USD its possible that its going into a third push chop after the clear 2 pushes down last week. I will still have the bias to the downside today but not as strong as it was yesterday. This 50+ pip range we had yesterday does show that the smart money is hesitant before the ECB rate decision and press conference coming up this week so we may see this continue until Thursday when that is released.
What will tell me they are optimistic will be the hourly close above the 1.3041 level during the London session today. I actually have doubts it will happen but it wouldn’t surprise me either. If it does stay in this range between 3041 and 1.2980 then I will be open for either direction during late in the London session today. My preferred position will be a short from a stop run above the 1.3041 level. otherwise a long from yesterdays lows at 1.2981 with a stop run is also another option.
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The GBP/USD made a clear rejection of the 1.5000 psych level yesterday retracing most of the inefficient move made Friday due to the disappointing manufacturing PMI figures. From what I see this was mainly due to seeing USD and Euro weakness at the same time and not so much GBP strength which what it looks like on the surface. Today I will be keeping my mind open on direction for this pair and will look to see signs of conviction on direction. The place I will look for a short is the current Asian highs of 1.5139 but will be cautious of the breakout level just above at 1.5147. I will consider a long down at the 1.5079 level but the manipulation will need to be clear.
Forex News Today
The economic calendar is light today. There is the Services PMI figures from Spain, France, Germany, Italy and the Euro Zone as a whole but the most important one will be from the UK. With Manufacturing PMI figures so bad last week it dont mean their services will be bad but it is hovering around the 50 level and expected at 51 today. If there is the drop below 50 for this release it will be even more GBP negative than last weeks miss. The reason is the UK being a service based economy a large miss to the downside will increase the chances of the technical double dip recession. Not that its not actually already there when you ask the man on the street but when the massaged figures catch up it is much more serious.
The US has it ISM Non Manufacturing Index expected to drop slightly but is still well above 50. A large miss will most likely create temporary USD weakness but it will need to be a couple points.
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