EUR/USD Forex commentary January 31, 2012
Yet again we see another emergency EU summit come and go with nothing more than “we made a step forward”. That was the 17th summit that has turned up dismal results and nothing has really changed. The EUR/USD started the drop in Asia and never looked back running 145 pips before getting a decent pullback after reaching Fridays lows. There was some comments from Sarkozy showing some solidarity with Greece saying he did not back giving Greek budget control to Brussels which means Merkel will most likely give with no one to back her on the deal to force Greece to accept outside budget control in order to get the next aid package. The deal is not dead in the water yet. Of course it really only amounts to giving the addict his quick fix without him voluntary going to rehab. If Greece dont want to change then they wont and just like the addict will be knocking on the door of the last one that helped him get his last fix. Lets not forget that Greece is just the first in line here also and the rest of the financial addicts are not far behind. The next few years are going to be interesting to say the least.
We do have a bunch of news today but most are not big market movers. Most important will be German retail sales expected up almost 1% but last months numbers have been revised down a little and 3 of the last 4 months releases were disappointing. If this release is a surprise to the downside it will signal that Germans are feeling the crunch more and the chance for EU recession increases. Other than that the German unemployment numbers may move the market if its a big deviation but I have my doubts it will. The last biggie would be the US CB consumer confidence well after I am in bed but with it expected to be a significant rise it could bring some risk into the market after London closes for the day.
Looking at the charts the Euro is in a steady up trend and was rejected during the US session. There looks to be more upside here. I am almost thinking it may be the crash committee that was actually holding the S&P above 1300 but we will never know for sure. The possibility for reaching the 1.3286 level is still in the picture and if they do solidify the debt deal soon then a run to 1.35 is not far off.
The 15min chart shows a nice short term up trend also with the US rejection of the lows. There was also some encouraging news from Japan this morning so the chance for an Asian market run up is high. At this point even though I am longer term bearish will be looking for the Smart Money to confirm the move up and take the long but not expect a long run. So far today the whole move up has been on weaker moves so it wont take much to change my bias and short here either. This could be a stop run up and any intent down followed by a faded move up I will take the short. keeping an open mind at this time.
Happy Trading guys