EUR/USD, GBP/USD, Gold Analysis June 4, 2014
The EUR/USD stayed within the 60 pip range its been holding for the last five days pretty much as expected due to the beginning of the month news we always have. They are surely waiting for something to give them reason to push but none of the data so far has been enough to give them conviction on either the Fed or ECB acting in a significant way. The Euro Zone CPI data was slightly worse than expected yesterday but only missing by .2% wasn’t enough to raise deflation fears and give the ECB reason to act this week. Most are pretty sure they will do something but just what that is will have n effect on which way they make the next push. With the full blown QE pretty much off the table for now they will do some fudging of interest rates and possibly go negative on one or more. My thoughts are if they can avoid going negative they will but a drop to zero on at least one of the benchmark rates is just about guaranteed. If that is the case the Euro will strengthen for the most part with the exception of the Eur/Gbp making the larger push most likely taking back some of the previous moves last month.
Again I will have no bias on direction today with the safer levels to trade being 1.3636 for a short or 1.3589 for a long. The levels in between are valid but I will want to see conviction below the current Asian lows at 1.3611 during London to short from 1.3620 or vise versa see the conviction above 1.3620 to go long from 1.3611.
The movement on the GBP/USD yesterday does show again that the break down has more potential but again the news releases later this week could change that. They are clearly waiting to move this pair as well so the high and low of this range will be the best entries with a short from 1.6776 or the long from 1.6700. As with the EU there are levels in between but this pair is a good example of why we look at some levels being more significant than others. If you are a member and light don’t go off in your head regarding this then you should go over the live London session recording on the significant levels until it does. (hint: notice how price blew past the daily high from Monday yesterday to test the Friday high) You should know the reason why. 😉
With this potential conviction during Asia forming I will question it but if it does show, considering they already tried a false break, if it does go down and test the lows during the London session I will be more willing to short around the 1.6729-34 level with a clear set up.
Gold did finally have a slightly higher close showing the turn may be coming but I am still in agreement that they will give it at least one more smack down before the let it rise too much or in reality the true market forces overwhelm the manipulation. As you can see in the Max Kieser episode I will be posting in the blog today there will be a melt up rather than a spike in gold as other things like bonds and equities take the hit. Until bonds and equities do that they will have plenty of opportunity to give gold another beat down.
The levels for entries haven’t changed much and I will be open on direction but if I manage to catch a long I wont be holding for a large move for more than a day or so.
Forex News Today
The calendar is somewhat busy today but the Services PMI data from European countries will not do much without a big surprise downward. Most are well above 50 except France so even with a sizable miss from Germany we will probably just see a spike and hover back in the range due to the news tomorrow with the BOE and ECB. The UK Services PMI has a decent chance of getting a set up before hand and decent move with a large miss so that’s what I will be looking for most today.
The US has ADP Nonfarm that will also need a big miss to make them think Fridays NFP could do the same. Otherwise later the ISM Non Manufacturing PMI will likely be overlooked without a large miss as well. As far as probabilities with these, its questionable considering the data lately.
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