EUR/USD continues to take a hit as Greece has once again failed to make progress at the most recent Eurogroup meetings. Potential for default blah blah blah. Ignore the date on any article from the last couple of years and read it like it was today.
“More work is needed to bridge differences holding up a comprehensive agreement.”
Boy, I love writing about Greece.
In the overall down trend we are in, we are also just seeing some profit taking on the charts as the Euro pulls back off it’s recent swing highs and normal service resumes.
Elsewhere, we see NZD/USD continue to get absolutely battered, with the expectation that the RBNZ will slash rates hard now being firmly priced in.
I can’t help but look at this situation and think that it’s going to be a buy the rumour, sell the fact play (well in reverse…). Wait and see when we get a little bit closer but the bears are well and truly in control for now.
On the Calendar Today:
We see Home Loan data out of Australia this morning followed by the annual budget release later in the evening from Treasurer Joe Hockey. The budget is not typically a market mover but we all know how the market reacts to uncertainty so just be aware of the potential for some event risk if you are trading AUD.
We also get Manufacturing Production data out of the UK which could provide more market action than the budget.
AUD Home Loans
GBP Manufacturing Production
AUD Annual Budget Release
We spoke about this one on Twitter yesterday, noting the way that the buyers seemed to be soaking up everything they can at the marked point of interest on the chart. You can see that price has reacted at this point before at the first marker and then the double bottom at markers 2 and 3 show that the level is in play.
Add in the fact that trend line confluence lines up nicely to support price and we have a few supporting signals looking for the pair to go higher.
With all this action in bond markets helping to give the USD a lift, lets see what the chart looks like.
After (as good as) the double top formed at the end of March, price has consistently fallen down to it’s long term trend line. The level saw some buying, but they couldn’t sustain anything and the trend line broke. But as I’m sure you know, it’s never as simple as ‘sell the trend line break’, especially in a longer term strong market like the USDX.
Even though the trend line broke, no horizontal support levels went with it and price has stayed in it’s range. So often when trend lines break, price consolidates and a re-test of the broken support as resistance just sees price tuck back into it’s original trend rather than the text book re-test and hard drop.
Concernedly, price STILL hasn’t regained any broken support levels marked in red since it made a top. The lowest red level will be key because price would then have come back above it’s long term trend line as well as broken the short term down trend.
I am happy to play for USDX price resuming it’s up-trend which supports the USD/CAD pattern above.
Let us know what you’re watching or trading? Leave a comment below or mention @VantageFX on Twitter.
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