US focus with trade balance then FOMC minutes
City Index July 11, 2012 1:00 PM
<p> EUR/USD Range: 1.2246-1.2275 Support: 1.2150 Resistance: 1.2450 The single currency continues to grind lower amid the uncertainty of the German Federal Constitutions Court’s challenge […]</p>
The single currency continues to grind lower amid the uncertainty of the German Federal Constitutions Court’s challenge and scrutiny of the ESM bail-out mechanism and fiscal pact. Euro pessimism continues with the market positioning looking very short but with the US data continuing to deteriorate the market will be looking at the FOMC minutes this evening for signs the dovish core at the Federal Reserve are pushing towards QE3. Although technically oversold I’ll be looking to switch a short EUR/USD into a short EUR/CAD-AUD-NZD on any QE3 hint this evening.
Range: 1.5512 – 1.5533
Robust manufacturing data gave Sterling a slight bid tone as the risk trade came under pressure supporting the USD. Those of you who are regular readers will note my scepticism of UK manufacturing data as it’s the service sector that supports growth in the UK and with the demise of the manufacturing industry there is a practically no chance of a manufacturing UK led recovery. (Apologies for sounding like the UK Summer) EUR/GBP has now broken the 0.7900 support with 0.7700 (post Lehman lows) now seen as the next target.
A dull range but with US trade data at 1.30pm expected to show a deficit of $50 billion and the FOMC minutes this evening at 7pm the pair could be about to break out of the doldrums if the US yield picture changes. The BOJ meeting concludes tomorrow and the consensus seems to edge (just) that more easing will be announced. I’ll be looking to trade the breaks on the events with stop entries 78.80 and 80.20 but I’ll be wary on a low78.00 handle if the BOJ disappoints and we head towards intervention territory.
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