Huck’s Pre-Week Market Analysis for July 22 to 26, 2013

Fundamental Picture

There weren’t a lot of nail-biting events last week. Perhaps the biggest market-mover was Fed Reserve Chairman Ben Bernanke’s testimony to the U.S. Congress in which he made it absolutely clear that tapering still isn’t a done deal and that it doesn’t equal to tightening.

His remarks initially sent the dollar lower, but the move wasn’t sustained. After all, Bernanke didn’t really say anything new. It helped the dollar a lot that data from the U.S. came in better than expected (unemployment claims and the Philly Fed manufacturing index) which supported the Fed’s intentions of withdrawing some of its stimulus measures.

We also saw market sentiment dictate price action last week. For instance, news about the PBOC removing its floor for lending rates boosted risk appetite a bit and sent the dollar lower.

This week, we only have second-tier data due from the U.S. I wouldn’t be surprised if we see market sentiment continue to affect price action. I’ll be keeping close tabs on China’s and the euro zone’s manufacturing PMI reports as they could spark volatility among the major currencies in the next few days.

What are you looking out for?

Potential Trades

EUR/USD: Bullish

EUR/USD 1-hour Chart

On the hourly timeframe, we see that EUR/USD has constantly gotten rejected around the 1.3200 area. But I just can’t turn the other cheek and ignore the higher lows that it has been making! Because of this, I have a slightly bullish bias for the pair. I won’t pull the trigger on it just yet though, at least not until there’s any fundamental reason to go long.

USD/JPY: Bullish

USD/JPY 1-hour Chart

Similar to EUR/USD, this pair has also been making higher lows as of late. We can actually see a rising trend line from which price just bounced off. I’m a bit hesitant to go long now even though price is already testing the 100 and 200 SMAs. I want to get a feel of the market’s fundamental themes before putting on a trade.

How about you? What pairs are you looking at?

XOXO,

Huck

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