March 17, 2014 Daily EUR/USD, GBP/USD Analysis
Friday the EUR/USD made the first push upward to close any inefficiency in the move from Thursday. Technically I will have the bias for the next push to the upside but considering the large chop its in I will be more open on direction today. My issue is that with the current fundamental picture in Ukraine getting worse the USD strength could kick in any time as things progress.
The best level to go long from today will be 1.3872 if they can push down during the Asian and London sessions. Otherwise if they push upward to test 1.3932 first then the 1.3897 level has better probability. Since it is close to current price I will want to see them accumulate toward the upside to add to the probability that they have moved price enough to pick up their full position. If it remains in this tight 14 pip range this morning then they will likely test down to the 1.3872 area. If they do run it down without a short opportunity and they push all the way down to test the lows Friday I will also be looking for a long there but prefer to see that happen during the US session. Assuming they hold this range I will be open for the short with a stop run to 1.3932 but will want a good entry close to the highs and will be watching for any conviction above there to minimize any potential losses.
The GBP/USD is telling a different story with the short move Friday testing below the psych level at 1.660 and getting rejected to the upside. At this point it is best to keep an open mind on direction here also. With the hard rejection last Thursday I will have a slight bias for the second push down but it has a higher probability of staying in this 150 pip range for today anyway. The best level to see manipulation for a short is 1.6649 but the proximity to current price does concern me. I will want to see the test lower during Asia to take the short from there with a pullback during London. Otherwise if it does show conviction above there I will be bias for the long and look for them to run it to the Asian lows or just below at 1.6620 planning to take profit around 1.6700 just below the average daily range.
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Forex News Today
The only significant event during the London session today is Euro Zone CPI data. If this disappoints and goes below zero then Mario Draghi will be even more worried about deflation and may actually get a green light from the Bundesbank to start up the printing press making the Euro weaken. If it manages to be an upside miss then I expect it will cause more Euro strength but will be a smaller move unless its a large miss.
The US has Empire State Manufacturing, TIC Long Term Purchases and Industrial Production figures. These are all medium impact events so they will need large misses to create any sustained moves and will most likely be used to manipulate. Later in the day the Buba President Weidmann speaks so they will probably wait to see if he starts following Draghi on deflation concerns since Germany could use a weaker Euro.
The Asian session tomorrow has the RBA Meeting Minutes so any Aussie dollar traders should watch out for that.
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