In extension to 'Bull in disguise.. (29 Aug12), as far the euro is concerned, tis the season to be jolly as market shifts its attention to other factors which are directly and indirectly offering some form of support. No prize for guessing, US Fed's potential QE3 has definitely stolen the limelight for now. Indirectly, as long as global growth does not show signs of a turnaround, commodity currencies will begin to suffer and potentially already in the process of reversing a trend it so powerfully dominated for the past 4 years (ie EURAUD, EURNZD, etc...)
Yesterday's session was another boring one with a tight range of 1.2518 to 1.2573. Is the Jackson Hole symposium this Friday really going to be the place where Bernanke is going to offer any concrete measures to revive the US economy? I think not, what would then trigger a big move? Let's go through a few scenarios here:
1. Bernanke hints of QE3 > US$ negative > E$ up
2. Bernanke disappoints with nothing explicit > Knee-jerk reaction E$ down > Market disappointed after all the anticipation > US$ negative > E$ up
Bearing in mind, all these happening within the full moon period which starts today!
Stop loss orders from yesterday's book revealed the following: 1.2490 & 1.2580. Other noteworthy limit orders: 1.2450, 1.2470, 1.2500/10, 1.2590, 1.2600 & 1.2650.
Technically, intraday indicators are showing a mixed bag of signals and momentum is pointing to further consolidation with a slight skew to the downside which is inline with E$ testing the lower trend line of the channel. Expect market to start positioning for tomorrow today. Meantime, focus on the range but I would prefer to buy the dip. Initial support at 1.2440/50, channel trend line at 1.2400/10 and stronger at 1.2350/60. Resistance at 1.2590/600 with stronger at 1.2640/50.
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| E$ 8hourly chart - Bullish channel |
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