Daily EUR/USD, GBP/USD Commentary March 15, 2013
The EUR/USD has shown us a failed first push to the downside yesterday with the potential first push up now going back into the chop we saw at the beginning of the week. Since its back into the chop I wont be having much bias to the upside but it does have the potential to continue today. We are seeing what I mentioned in the Tuesday commentary with the ramp up in US equities to all time highs and creating a risk on environment holding the EUR/USD up as they also go into risk currencies. This did have something to do with the better than expected retail sales from the US but the details of the release weren’t really that good at all. So how long this will last is anybodies guess. My thoughts are when we hear of a large European bank going under. However with the Fed using pretty much all of the 85Bil a month it runs off the presses each month to support those banks it could be a very long time. Then again Spain, Italy or a US reality check could trigger something too.
My trading plan for today will consist of watching the key levels for manipulation. For a short I will be looking to yesterdays highs for the stop run. With the hourly 200 EMA right there close we could see the clear manipulation there. The potential is slightly higher for a long today with this intraday push to the upside we have so the levels to be looking at will be the 1.2996 and 1.2977. Having said that I wont be looking for a long run since it is Friday so it does have a good chance of remaining capped by the recent highs around 1.3065-75 level.
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The GBP/USD had the same risk on movement but had an extended move due to the EUR/GBP having a bad day. This does go to show that the Euro is not really strong but the risk appetite in equities it whats driving the up moves.
The cleaner way to look at the GBP/USD is this was the expected second push I mentioned yesterday but I will be treating it with caution due to the fact it ran for over 200 pips on the day. This opens the possibility that it will get a deeper pullback if they want to continue this for the next push up. Plus it don’t have that far before it reaches a daily resistance level at 1.5157.
I do have a long bias on this pair today but considering the extended push I will be open for a short to get in on the pullback for a quick 40-50 pips but the set up will need to be nice and pretty. Otherwise I will be looking for the long entry at 1.5046 or possibly the Asian lows of 1.5074 if the Asian range since it coincides with the lows during the end of the US session.
Forex News Today
Scheduled releases are light until the US session when we have CPI data from the US. With expectations around the 2% limit if we get a surprise to the upside it should create USD strength. However how long it lasts is a different story. My thoughts are even if its starts creeping up eventually the Fed will go the way of the BOE and say something to the effect of the US will have to tolerate higher prices because we are not going to stop the presses.
Today is also the second day of the Euro Summit so the potential for tape bombs is there but I expect most of anything significant was said yesterday so just be aware of it anyway.
Have a great weekend
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