USDX Closes Below March Lows May 7, 2015
USDX Weakness Set To Test Feb. Lows
At this point I am not all that convinced that the USDX will be testing the February lows just yet but the thrust and daily close below the March surely suggests it will be in the cards soon. My problem with this move is now they are showing a likely three push move and could also pull a reversal to flush out weak longs before a run to the Feb. lows that are actually rather close.
The issues at hand fundamentally are Greece more than likely not reaching a deal with the Troika even though the rift between the European Commission and IMF have been swept under the rug for now. I surely wont be holding any position over this weekend with Monday the 12th being a potential D-Day for Greece. The other problem I have is although Janet Yellen did mention that stocks are over valued the fact that interest rates are rising in the US whether the Fed likes it or not, coupled with bad data does increase the probability that QE4 is actually closer than a rate hike from the Fed. There lies the rub as well. Any QE will be USD negative while equity positive and an imploding Euro on negative Greek news may just negate and Euro strength against the USD. Fun times ahead for sure.
EUR/USD Runs Second And Third Push
As members know I am never happy when they run pushes like this but fulfilling the majority of the requirements for a higher probability of a reversal is there. Having said that since there has already been a 50 pip pullback from yesterdays highs I will still be open for a long today and watch for conviction below 1.1316 confirming they will run a deeper reversal. The topping is there although not all that convincing so I will want a test of at least the 1.1356 level for a short set up. A stop run to the highs would be even better. Otherwise I will be open for a long at 1.1316 while looking for the hourly conviction telling me they will test down to 1.1277 for a back side short from either the Asian highs or lows.
GBP/USD Runs Second Push
With the GBP/USd running the second push I will be bias for the next push up today. However I will also be cautious of the topping formation at yesterdays highs that does suggest they will be either holding the range or even test down to yesterdays lows. The kicker is the UK election that results are probably trickling in as I type. I am not watching and trading it like I did last time but it seems as though the same scenario has good potential to happen again with a struggle to form a government and disagreements may make it even worse this time around and require a second vote.
The best level for the long is down at 1.5212 but may test as low as the 1.5200 psych level at the NY/London overlap lows. Otherwise I will wait for yesterdays lows to attempt a long position and be keeping an ear open for developments on the election. Today just about every move on GBP pairs will be related to it so for those who cant at least get information and understand what it means for the GBP crosses the best plan would be to stay away from these pairs.
EUR/JPY Second Push Failure
As I suspected the EUR/JPY second push down failed to produce the third yesterday and followed the EU to finish a fist and second push upward. Since there isnt much rejection like there was showing the potential failure yesterday I will be more bias for the long today. The daily close above last Fridays high does show conviction and a rout on the EUR/GBP on bad election results may well spike the Euro higher as the EG drags both the EU and EJ with. The best level for the long is now the Asian lows but its sure looking like something is brewing and the 135.26 is holding. If it manages to show conviction to the upside I will consider a backside entry during London but will want to see the EU doing the same.
Forex News Today
The big news today is obviously the UK election results so I will be doing my research before London open to get an idea of fundamental direction and trade along with it today. Otherwise there is only German factory Orders that has potential to help or hinder moves in the Euro crosses but I expect more of just a stop run unless there is a very large miss.
The US only has Thursday Unemployment Claims and should only get them running the USD around if it disappoints big. Any thing close or a slight improvement will more likely be over looked if the election results are causing the pushes.
The Asian session tomorrow has potential to be wild with the BOJ Meeting Minutes and RBA Policy Statement along with Chinese Trade Balance. Fun fun
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