EUR/USD, GBP/USD Daily Analysis March 14, 2014
The way the EUR/USD moved yesterday it tells me there is something going on considering risk. There has been a bit of some escalation of words between Russia and the west regarding the Ukraine situation. Germany chimed in for the west along with the Chinese on Russias side of course. At the very least the war of words is heating up which explains the risk off move. On top of that there was dismal news on Chinese Industrial production. Overall just not a good day after we got a nice pump up on USD weakness during the Asian session that continued well during London but was literally beat down during the US session.
This definitely qualifies as a first push down so I will have the bias for the continuation with the best level to short from being the 1.3877 if they can push down during the Asian session this morning to widen the Asian range. Otherwise they may push it up to 1.3896 and try to clear out some weak holders first. I will be open for the long today to potentially catch the pullback and retrace some of the move on the end of week flows. What I would prefer to see is have them hold the Asian range lows right now then test 1.3842, which is also Wednesdays lows, with a stop run at the hourly 200 EMA.
The GBP/USD had pretty much the same move throughout the day showing the probability that the push up is false. Again this was most likely news related and I expect it to continue but will be treating it the same as the Euro. The best level to short from is most likely at 1.6643 since the lower daily level is close to current price. Otherwise I will be open for the long from around 1.6600 where the four hour 200 EMA sits but will want to see the test upwards during Asia first or they will likely push to the daily 1.6583 level or even the overall lows at 1.6568 if they intend to retrace some of the down move yesterday. Having said that if things continue to escalate with the rhetoric from Russia and the west this will continue to be a risk off scenario and we will see the next push.
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the only significant data release is during the US session with PPI data. The way I see it is the higher probability is for a miss to the down side but it will need to get below zero to make them freak out about deflation. Otherwise a miss upwards would need to be big in order to get them to start thinking they are happy with inflation.
Keep an eye out for any escalation of words from the East and West regarding Ukraine. Below is a link to a goos article that explains why its likely t increase for now at least.
Have a great weekend
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