Waiting For The ECB and NFP

It’s been a fairly quiet day in the majors with only moderate movements in the Cable and Yen. Unfortunately my darn Yen trade didn’t work out like I wanted to while my Cable analysis was right on point. At the time, the Yen seemed like the better looking trade, but I should’ve known that the 15 year high that the Cable is at right now would have a been the better currency to fade since it’s at a very extreme level.

During the initial dollar drop 2 weeks ago, the Yen made the least amount of gains against the dollar compared to the other majors. It seemed as if last night the Yen finally did some catching up after a statement from the BOJ’s policy maker Mizuno came out stating that the BOJ should have confidence that the economy will develop as projected. It’s looking more and more like Japan is ready to do some aggressive rate hiking next year as they have been talking about their economic growth for some time now.

All the Euro and Pound data that came out early today were positive which should give them more support, and other than the ISM Non-Manufacturing report, the US data once again came out negative. The services sector (Non-Manufacturing) makes up about 80% of the economy and the fact that the dollar only made moderate gains despite the expanding ISM number gives me reason to believe that the dollar is breathing its last breath.

The next big thing the market is waiting for is this Friday’s Non Farm Payroll report which will give us an idea of how the job market is faring. The ECB is expected to raise their rates this Thursday so I’m assuming the market has already priced this in. However, we could still see the Euro push higher after the statement.

Coming Up:

There aren’t any major reports coming out tomorrow.

Chart Analysis:

EUR/USD

Out of all the pairs, the EUR/USD looks to be the most likely to make a reversal tomorrow. There is a light economic load which means technicals will play more of a factor tomorrow. We’ve now seen 2 spinning tops form on the daily chart and the daily stochastics is still showing overbought. I am expecting this pair to move down to 3250 tomorrow.

Trade Idea:

Sell at market (around 1.3325); Stop Loss= 1.3370; Target= 1.3250

GBP/USD

The Cable made a nice retracment down to 9700 and finally settled to around 9730. I don’t think the Cable is done with its retracment yet. Daily stochastics hasn’t flinched even with today’s drop so I think the pair will go even lower tomorrow. Watch for the pair to hit 9650 and if it’s frisky, it may even hit 9600.

USD/CHF

The Swissy is still chillin around 1900. It can’t seem to leave that level. One one hand it can’t break it and on the other hand it can bounce off of it. It’s like 1900 has some kind of glue on it that keeps the price sticking to it. I still think this pair is going to move up to its 50 SMA on the 4 hr chart. With the light economic load, we might see this take place some time tomorrow.

USD/JPY

Boo the Yen! I repeat…Boo the Yen! My trade didn’t work out yesterday so I’m booing the Yen right now. It’s such a bunch of crap too because I know the pair is going to go up. I just know it! It’s going to move to its 50 SMA on the 4hr chart. How do I know this? Well ok, I don’t know exactly for sure, but I do know that it’s going to move up to its 50 SMA on the 4hr chart! Wait-a-minute….. Kidding aside, daily stochastics is oversold and I see a mini bullish divergence so I do have some kind of method to the madness. My gut tells me the pair is going up to around 115.50 which if you’ve been paying attention is where? You guessed it. It’s where the 50 SMA is on the 4hr chart.

Conclusion:

The market will either follow the technicals tomorrow or it will be extremely quiet since there aren’t any major economic reports coming out. I’m hoping it’s the former! Happy trading everyone. Feel free to comment.