Trade Team Update – – 7/29/08

July 30, 2008 at 5:25 am Leave a comment

By FX Insights

Trade Team Update – – 7/29/08

I’m still in meetings and will be on the road for about an hour and a half until I get back home. I’m sorry for the lack of update today, but that’s life and there’s nothing I can do about it. 

Today’s move was pretty simple… an upside surprise on U.S. Consumer Confidence, which is a key fundamental release led to eur long profit-taking, which also led to euro short contracts being taken, which led to USD strength, which took down oil and gold, and the USD strength pushed the USD Index up, and the overall slide down triggered stops along the way which further fueled the fire. In addition, equities helped keep the USD supported and vice versa. Pretty simple equation on all that…

As you should all know, I’ve been bearish on the euro and remain as such. I do have longs from 1.5558 on up, but will certainly be adding shorts on any break of 1.5600 on up. 

Risk will remain on the euro with tomorrow’s ADP data coming under focus by the markets. The data is expected to be USD positive even though the forecast is showing an abysmal net loss to jobs. 

Price action is empty with the complete lack of liquidity… Asia is not making any moves and as I said in the chat we’d not see a break of 1.5600 during the Asian session this evening and that’s how things have played out. 

We could see an attempted move up between 0100 EST and 0300 EST. Don’t forget that we have Euro Consumer Confidence which is widely expected to print to the downside which will only serve to put the euro under pressure. 

Commodities are very weak to the downside which is offering zero help to the euro. 

As far as price levels go, I’m not in any position right now to calculate key levels but bearing in mind we have NFP coming on Friday and the banks can do further positioning between now and then. 

A sustained break of the 1.5550 level should easily open the doors to test the 1.5500 – 1.5480 level. Prices will likely struggle at the 1.5620 level on up. A sustained break of 1.5660 will be required in order for any testing of the 1.5700-1.5720 level. 

Risk remains to the downside as the underlying fundamentals of the market and the market sentiment is against the euro and working for the dollar. 

Be smart here and do not over leverage.

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