EUR/USD, GBP/USD, Gold Daily Analysis June 2nd 2014
The EUR/USD showed us why we need to consider the month end flows last Friday making what technically is a first push up while having a failed second push to the downside. Considering it was the last trading day of the month I will be treating it more open on direction than bias for a second push today. I will prefer long today but I want to see these Asian lows hold with no conviction below during the London session in order to take the entry. If they do show that conviction then they will likely test the 1.3607 level or below at Fridays lows before any turn. The levels I will be open for the short are 1.3637 or Fridays highs of 1.3648.
The GBP/USD showed the same potential first push but didn’t go as far to get the failed second push. This pair I will be more open on direction since we could still get the third push down since this the first push was potentially just the end of month flows last week rather than true conviction. The best level for a short is Fridays highs of 1.6776 while I will be open for the long from 1.6728 but will need to see a clear set up from there watching for the conviction below. Otherwise the safer level for a long is 1.6700 which is also where the average daily range level currently is. If it does test down that low I hope to be short looking to take profit or waiting for the break down.
Gold made another move to the downside Friday showing even if the USD weakens they can still push Gold down when they want. It did test a significant daily level at 1243.42 and is showing that on a daily scale its slowing with not a whole lot of conviction to the downside. My best guess is that as they push it down with paper the big boys (central banks) are buying up the physical. This don’t mean it cant still go down as they want better prices but it will take some conviction to go past 1235.92 and if they do push it below there the a test of 1187.82 is likely before price is supported for a potential turn. The best level to short from today will be Fridays highs but they may hold it below the 1251.41 level during the London session so I will be open for the short there during the NY session. Otherwise the long from the lows is valid but they seem to want to keep pushing it down for now and I will prefer the short.
Forex News Today
The calendar has a slew of Manufacturing PMI data today starting with Italy, France, Germany and Euro Zone. Most are expected flat with the exception of Italy expecting a small drop. Since they are all well above 50 except France, I expect it will take a large miss to the downside to create a sustained move with German figures being most watched. If that misses big in either direction it will at least cause an opportunity to manipulate. Germany also has CPI data expected to rise above the last below zero print. As long as its above zero the likely hood of the ECB going full print mode goes down while if they do show deflation the probability goes up. Even though most expect them to do something this week I have my doubts they will go full print and try negative rates first.
The UK also has Mfg. PMI data expecting a small drop but again well above 50. If it does miss big it will most likely have a bigger effect on the EUR/GBP than the GU.
The US Has ISM Mfg. PMI data as well expecting a rise and as long as it comes out as expected the USD should strengthen as the probability of the tapering continuing goes up but if it misses to the downside the opposite is more likely.
Asian session traders need to keep an eye on the Aussie Retail Sales and Chinese HSBC Mfg. PMI data but more importantly the RBA rate decision later in the day.
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