EUR/USD, GBP/USD March 25, 2014 Daily Analysis
The EUR/USD made what looks to be more of a fat finger move late in the day with no real news pushing it. Never the less it is a push of note and I will have the bias for the next one up today. I am still going to be open for the short with a stop run to the highs at 1.3874 but the probability is for the long today. Some were talking of this move being a stop run in the EUR/JPY, which may be true but we will have to wait and see. Since the correlation with the EU and EJ was tight during the move then the chance is that if that was a stop run on EJ then the Euro will follow.
The best level for a long will be the break out level of 1.3808 but if it drops below with conviction during London then they will probably run it down to test the lows in which case I hope to already be short. Otherwise I will be open for the long at the lows at 1.3762 during the NY session if they run it down during London, run stops to the lows and I am not already short and taking profits there. There is a slight chance they hold here and run it down during the Asian session and hit the breakout traders to both sides of the range, then run short but since the level at 1.3844 is a much higher risk entry I will need to see that particular move in order to take the higher risk trade there. The GBP/USD has also had the meager attempt at a first push making a 71 pip move on the day. I have to say this looks to be even more of a fake out with the fat finger move being fully retraced in the next hour along with the day closing right in that area. Since the move is still within the third push from last week its best to be open on direction with this pair. The safest entries will be from either the highs for a short or lows for a long but I will be open for the short at the 1.6519 and 1.6509 with the right movement today. The 1.6520 has more confluence while the 1.6509 is too close to current price so if they can manage to widen the Asian range to the lows the 1.6520 will be where I prefer them to reach with a nice trap. If they don’t then the probability is they will test yesterdays highs.
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Forex News Today
The calendar starts off with German IFO Business climate and Business Expectations. These will most likely be close to expectations since the sanctions on Russia have just started and this is last months figures. Germany hasn’t really jumped on board yet and may not do so since they do a lot of business with Russia these days. Should that actually happen then next month we may see some significant movement in this data. This time around it should be close.
Thirty minutes later is the UK CPI release. Barring a big jump to the downside showing potential deflation I doubt this will do much either. I do see a bigger chance for a disappointment here but will most likely be close also.
The US has CB Consumer Confidence and New Home Sales showing as high impact but with expectations for housing being a drop and the Confidence on the rise I expect a miss to the downside if consumers are hurting to have a higher impact on bringing thoughts of the Fed ramping up QE again. Otherwise as long as these releases are close to expectations the big boys will likely wait for the Super Mario Draghi speech a little later in the day.
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