Daily EUR/USD, GBP/USD Analysis March 6, 2014
The move on the EUR/USD yesterday is indicative of what we see when they are waiting for something which could easily be the rate decision and press conference from the ECB. With all the PMI data yesterday being positive misses, that should have created some EU strength and it didn’t. Something is up. There are several issues I could mention but in reality I will be guessing as to which one is most important so I will spare you that and just wait and see what they bring us today.
We do have some conviction below the lows on Tuesday that tells me they have a slight higher probability of running the EU down today but that is not enough to give me a solid bias for the day. I will be keeping an open mind on direction with the best level to short around yesterdays highs at 1.3744. The problem with that level is the close proximity to current price so they have a good chance of pushing up to 1.3763 if they don’t widen the Asian range to the downside first and preferably run stops to yesterdays highs while getting the breakout traders on board. Otherwise I will wait for the push higher to short. I am open for the long position also and will need to see the opposite happen with regards to widening the Asian range with the stop run to the lows around 1.3711 during the London session or possibly lower at 1.3693. I will also be watching for any conviction below 1.3693 in order to gain a bias for the short.
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The GBP/USD has a different story all together with a first push to the upside yesterday. This move is a classic example of why we can never look at the news as something can trade alone but only use is as confluence that backs the current set up we are seeing. The reason is that the UK data was only a small positive miss while almost all the Euro Zone data was a much larger positive miss that should have at least held back the move on the EUR/GBP but it didn’t. This shows that the big boys are still in charge of movement on a short term basis.
My bias here will be for the next push to the upside while keeping in mind this could be a false push upward. The best level I see for the long as of now is the 1.6700 where there is confluence. The only way I will consider the Asian lows as a good level is if they can push the Asian range to the upside preferably seeing some conviction above the highs yesterday. Otherwise I will be open for the short with the hourly stop run above the highs at 1.6740 as I watch for the conviction telling me they il more than likely push it upward.
Forex News Today
The calendar is slow today but the events are big with the rate decision from the ECB and ensuing press conference. The UK also has its rate and Asset purchases but is likely to be as expected so the focus will be on Super Mario and the ECB press conference. There also is German factory orders but seeing how the big boys reacted to the better than expected data from the EUZ yesterday this will need a large miss to create much of a move and will most likely be manipulation before Draghi takes the spotlight.
The US has a Fed member speech along with Thursday unemployment claims and later their factory orders, however they will most likely be waiting for Mario to make any substantial move at that time of day.
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