January 14, 2014 EUR/USD, GBP/USD Analysis
The EUR/USD did not get the next push up I expected yesterday but considering the way they kept price in a 50 pip range there is still a good chance they will do it today. Having said that, the chop does also open up the possibility for this push being false and we get the move down today. Therefore I will be keeping an open mind on direction with the small bias for the long again. With all the support at the 200 EMAs yesterday the 1.3645 level has the best potential for a long position. They may stop it at the Asian lows but in order to be convinced they have accumulated their position I want to see the test of the highs first. Or better seeing the conviction above those highs. Of course the best level for the short are the highs and in order to take the trade there I want to see clear stop run.
The GBP/USD had a wild run down for 161 pips so they could go either way on this pair today also. I tried to find a tape bomb that caused such GBP weakness but didn’t see anything of note last night. Normally I would expect the move to continue and I will have the small bias for the short here today. However if they want to squeeze out some weak shorts they will run it up first. Having said that the word on the wire yesterday that the move was due to big names selling GBP across the board so that adds a little to the short bias. The best level to short from is around the psych 1.6400 but price action will need to be clear there since there is a good chance they push it to 1.6422. The best level for any potential long is 1.6358 at the 4hr 200 EMA but if I am already short and I see support kicking in there I will hold unless I am already up around 50 pips and have my take profit set there.
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Forex News Today
The significant news releases start off with CPI data from the UK today. I have my doubts it will be a mover unless it drops below the 2% mark. If it does pop up a bit it shouldn’t have much effect since the UK has been tolerating higher inflation for years now.
The Euro Zone Industrial Production is a little later expected to rise into positive figures. It is noted as a medium impact event but if it has a big miss they could use it as a reason to manipulate.
The US has Retail Sales data expected to be flat on the core data while the data including gas and food is expected to drop. If we get a big disappointment it should cause USD weakness while the opposite for a miss to the upside. I expect it will take a much larger miss to the upside to create and true USD strength and doubt that will happen.
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