Not much planned today other than Canadian Employment figures. Other than that, I expect Forex traders to take their cues from the action in the commodity and equity markets. The latter looks solid as, a better than expected Same Store Sales numbers helped stir optimism in to the markets.
The EURUSD continues to be trading all over the place as rumors regarding Greece have made trading in the pair very erratic. Technical wise, the pair did manage to hold above it 2010 lows that were set in late March yesterday However, the support appeared to be tied more to overall risk buying by Forex traders than Euro specific buying. As such, their remains lots of downside risk in the pair if it trades below 1.3262, and I wouldn’t be a buyer at these levels. Also, at a current 1.3350, there is horizontal resistance at the 1.3400 level which could easily thwart any rally.
I am becoming convinced that the Pound could be a good buy at these levels for two reasons. Firstly, throughout the week the GBPUSD has shaken off early morning weakness, and staged afternoon rallies. This tells me that the smart money in Forex is buying the dips caused by the morning headlines. Secondly, next week is expected to be a very light economic news week in the UK. As such, other than election news, headline risks are lower. On the technical side, there is definite resistance at 1.5330, however if we trade above that level, it could cause short covering to take place.
Still looking for a retest of 0.9300 and beyond. With Gold holding steady around 1150 the pair is liable to zoom higher at anytime. However, the fact that it hasn’t traded above 0.9300 yet, may mean one of two things. New money is electing to go elsewhere (ie the CAD) rather than chase the Aussie. Or, we are engaged in an old fashioned consolidation period, where longs from are taking profits at these resistance levels. After a losing trade in the AUDUSD earlier in the week, I am willing to take a wait and see approach.
Still holding the same opinion as yesterday. I would use any move again towards 1.0100 as a shorting entry.
Disclosure: Long GBPUSD