EUR/USD, GBP/USD, EUR/JPY August 13, 2014 Analysis
The EUR/USD conviction during the Asian session proved to be the intended move for the day yesterday running to this months lows and getting rejected once again. The more they beat these lows the higher the probability they will eventually break is usually how it works as they soak up any buyers along the way making it easier for the eventual break. That’s not enough to give me a bias for the day but it does build confidence in holding a short if the opportunity presents its self. Although I will still be open for the long as well today. We did see a much worse than expected German ZEW print yesterday adding a bit more fuel to the QE fire for the ECB. To be honest I don’t know how much more bad data it will take to get Germany on board with the print fest but I suspect they are inching closer with every bad release. What I do know is the ECB cant go full retard without the blessing of the Bundesbank so it could be at the next meeting or the following one depending on the data releases between now and then.
The best level for a short today is up at Mondays lows of 1.3379. There is a small chance they stop it below at 1.3375 but with current price so close it would be best to see them push it down during Asia first before testing during the London session. Otherwise the safest place to be considering a long is down at the 1.3336 daily level it was rejected from yesterday. However if it does get that low I hope to be short and waiting to see if they will make the break down. The 1.3347 level is valid for the long but I will be careful and need some clear trapping to take the long from there.
The GBP/USD did make the reversal after having the fake out to the lows and false conviction during the Asian session. Kudos to the members who took the aggressive entry before London opened yesterday. I was happy to see that the 50 pip profit target was hit for you guys when I got up this morning. Of course it was more due to the EUR/GBP weakness even though the USD did weaken a bit yesterday.
Today since we have a clear push for the reversal I will have a bias for the second looking for the long. I will still be open for the short since this could be a fake out and the USD come into more influence as the geopolitical scene heats up. The best level for the long is at 1.6794 but they could run it to the psyche 1.6780 level also before making a turn. The only place I will consider a short is at yesterdays highs of 1.6814 preferably seeing a clean stop run after a small push down during the Asian session.
The EUR/JPY did make an attempt at a push from the trade I couldn’t take during the Asian session yesterday. Without the UJ agreeing the trade was too risky so the safer move was to stay out.
The push down is borderline for a first push so I will still be more open on direction for this pair with a slight bias for the short. The best level to short from is where the hourly 200 comes in at yesterdays highs of 136.86. The break out level below is valid but seeing them moving on Yen weakness will need to be clear to short from there. Otherwise I will be open for the long from 136.40 but if it gets there hope to be short waiting for the break down.
Forex News Today
The calendar is busy today starting with inflation data from the big European countries. The more important will be Germany as usual with expectations pretty much flat other than WPI expecting a slight drop. As long as they are close we shouldn’t see much from them but if by chance it drops below zero then the Euro will more likely weaken. However it also may have the bad news is good effect and rise on thoughts of the Buba giving the green light on ECB printing. Its hard to say what the big boys will do on that.
Next is UK Unemployment data expected to drop another 30K from the unemployment list along with a drop on the rate. This should be good for the GBP as long as its close and we will get the second push today. If it disappoints big then the odds go down for getting the push. Having said that as long as it don’t miss big they will likely wait for the inflation report and Carney speech. Again they will be looking to see any more serious talk on raising rates of which I doubt but its possible. If he does I hope to be in the long well before and will have my TP moved way out just in case. There is also EZ Industrial production but I suspect the other data will trump it unless it misses in the same direction fueling more of a push on Euro pairs.
The US has Retail Sales expected to be flat as well so it will take a large miss to make much of a move on USD strength or weakness. The USD hasn’t been much of a factor in recent moves so that probably wont change until we get more info from the Fed. Of which they have been rather quiet on recently. There is a small chance the two Fed member speeches let some of the cat out of the bag but I have my doubts.