Equities Consolidate Ahead Of Fed Meeting Jan 28, 2015
Dow Drops 400 points but Holds Mid Month Range Waiting For FOMC
Something very interesting as I look at the daily chart of the Dow and S&P 500 this morning is that this is the only month both of these indexes have not made a higher high in several months. Im not going to stick my neck uout and say this is the end of the run, mainly due to the potential for more QE around the corner pushing them higher is certainly good. However doing it in the next couple days I dont see in the cards. The tell tale will be what goes on at the FOMC meeting today and press conference after most likely noting that the US will not be raising rates any time soon. I doubt they will come out and bluntly say that but there will be notes of recent data disappointments and we have to keep in mind what they have been saying all along. The fact that any rise in rates will depend on data warranting such a move. So far there hasnt been any thing close that I can see other than empty promises. Having said all that I do expect some USD weakness after the release later today but going foreward the price in the USDX has more potential of remaining sort of stable considering the 9 trillion in USD carry trades I noted in yesterdays commentary still hanging out there that will be coming back. Even so the moves will potentially be volatile.
EUR/USD Second Intraday Push
I will be bias for the next push up on the EUR/USD today but I also expect a deeper pullback as they exit yesterdays positions before the FOMC later today. I am also a bit concerned about the second level at 1.1279 due to having to split the difference between Mondays high and the low during London yesterday. Im never happy with that. However it does help to have the NY/London overlap highs from last Friday in there. Otherwise the potential for the dip to 1.1225 is certainly there.
GBP/USD Blows ADR by 40 pips
In the case of the GBP/USD having blown the ADR by such a large margin and testing key daily resistance its best to remain somewhat open on direction even thogh there are two clear pushes. The reason is the extended move may just be done and they will need some conviction to push beyond, in this case the FOMC meeting being USD negative. Here again I do expect a deeper pullback if they do get enough from Janet to break the highs but there are no guarantees there. Probability is surely there due to the complaints on the strong USD and crap data but again no guarantee. Having said that I will be looking for the long at the Asian lows to begin with considering the wide range but expect it to make a low and run up before a test during the London session. Otherwise there is a good chance they push as low as 1.5112 before a turn and I wont be holding for the break but taking profits close to the highs or at +40-50 before the NY open.
EUR/JPY Shows Short Second Push
Although I will have a small bias for the next push up on this pair the second push is well short of 90% of the ADR. However with the ADR being blown out well beyond normal I am looking at how it closed at its highs yesterday to give more probability for the next move up today. There is the problem of them potentially pushing the USD around today so I suspect any push will be limited due to that. The best level I see for the long is at 133.51 but if anybody caught the entry from around 133.69 this morning they may just run it off for you. Otherwise I will be waiting for a retest or drop to 133.51 in the next hour or two. The short from 134.18 has some credibility but I will only consider that if there isn’t a long set up and they clearly show that the UJ weakness is holding it back and would prefer to see the EU at key resistance adding probability.
Forex News Today
The calendar will be dominated by the FOMC today so dont expect much other than using the German IFO business Climate to better position them self for the Fed later in the day. This should be interesting.
MY APOLOGIES FOR THE BROKEN VIDEO OF INSIDE JOB IN THE COMMENTARY. I DIDNT THINK I WAS COPY WRITE INFRINGING WITH AN ITALIAN VERSION ALREADY ON YOUTUBE. HOWEVER YOU CAN STILL WATCH IT AT THIS LINK. STILL A MUST SEE!
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