FX USD/CHF, EUR/USD, GBP/USD Commentary March 21, 2012
The EUR/USD and USD/CHF were showing the nicest levels yesterday and have been very nicely correlated with the EUR/CHF trading close to the floor set by the Swiss National Bank This should hold as long as they maintain the floor and there is not such a deterioration of the Swiss economy to warrant the Swiss Franc to get weaker. Which is happening to some extent but it will be more obvious when they remove the floor set at 1.2000 for the EUR/CHF.
As I noted in the March 20 Commentary we were looking for the reversal and both the EUR/USD and USD/CHF showed a nice topping and bottoming formation respectively and I took a small position short the Euro and long the Swissy during Asia after the Asian market showed me the SM was holding prices at certain levels. My entries are circled on the charts. Notice how they did move 3 intraday levels down/up before the reversal during the NY session. Once they made the move in my direction I cycled my stop down and eventually got hit at +20 on the Euro and +7 on the Swissy. Not a great day but not bad either.
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As of this morning it looks like there is some risk sentiment coming back into the markets. The S&P and Dow futures are rising along with the EUR/USD that has just punched through its weekly highs and doesn’t seem to be looking back. I am half thinking that this is just an effort to take stops above the 1.3300 level but could be a continuation of the short term up trend also. Just have to wait and see.
As for the GBP/USD. It has still been holding firm in its 3rd level chop so I will be just watching that pair today to get a firmer direction. With the EUR/GBP coming into its 4hr 200 EMA it will be interesting to see if the EU reverses and the GU rises if the EG finds decent resistance there.
We dont have many major news releases today other than from the UK with their MPC meeting minutes, which could surprise, Public Borrowing and their annual budget. Other than that we do have Bernanke testifying before congress which should be interesting to see how much pressure he gets on QE3 and any hints he is considering it. There seems to be less reasoning for it at this time and he did say recently that there are no plans. Other than that the US existing home sales will be a good chance for some manipulation depending on if it surprises.
Looks like we have a boring day ahead.