[GVI Forex 2]

BOE was dovish enough so no buy the rumor sell the fact reaction.

You can use EURGBP as one indicator of GBP weakness.

In GBPUSD 1.2450 now becomes the pivotal level for day traders.

[GVI Forex 2]

Scroll down to see the GBPUSD chart I posted last night.

Low so far 1.2470 low vs. 1.2466 support.

The market seems setup for a buy the rumor sell the fact reaction but much depends on how dovish the BOE comes across.

[GVI Forex 2]

GBPUSD 4-HOUR CHART – WAITING FOR BOE

The market is expecting a dovish tilt so the surprise would be if the BOE is less dovish.

On this chart 1.2466 on the downside, the trendline and 1.2594 on the upside are levels to watch (major support is not until 1.2298.

But toss technical levels out the door and focus on 1.25 as that will dictate the tone post-BOE

[GVI Forex 2]

EURGBP 4 HOUR CHART – TRADES SOFT AHEAD OF THE BOE

As noted in the Morning Bid report, The Bank of England announces policy on Thursday, and while no change is predicted this week, dovish bets have risen recently. 

This has seen EURGBP firm this week, putting the key .8644 level on the radar as long as it trades above .8581.

Note the EURUSD lag on the USD upside, helped by demand out of its crosses, not only EURGBP but other EUR crosses as well.

[GVI Forex 2]

With the US economic calendar basically empty of key events this week it is like an addict having a tough time without his/her latest fix.

What we are left with is some revived Fed risk cut expectations as seen by slipping bond yields but little to go after on the dollar downside unless last Friday’s post-US job USD lows are threatened.

Otherwise, a mixed bag with JPY and AUD the underperformers.

EURUSD is holding up while above 1.0752, close to unchanged as it has been the benficaiory of varioius cross flows (note firmer EURGBP).

[GVI Forex 2]

GBUSD 15 minute CHART – Better bid but consolidating

GBPUSD is a bit of an outperformer so far today (note firmer GBPJPY_ but consolidating with the UK closed today for a holiday/.

As this chart shows, there are layers of support ahead of the pivotal 1.25 level with key resistance above 1.26 (Friday’s high).

This suggests little to go for within a 1.25-1.26 range other than intra-day levels as show on this chart.

[GVI Forex 2]

USDJPY 4 HOUR CHART- Is BoJ lurking?

When you see 2 currencies moving in opposite directions vs the dollar you can assume there are real market flows in a cross.

This is the case so far on Monday with USDJPY moving higher and currencies like the EUR, GBP, AUD, etc up (marginally so far) vs the USD.

Given what happened last time Japan was closed for a holiday (i.e. intervention) expect some caution pushing USDJPY higher but if I were in the BoJ’s shoes I would not want to become predictable.

Looking at this chart, the key level is not until above 156 and BoJ will likely want to see USDJPY stay below 155, suggesting 152-155 is sort of a no man;’s land for trading.

[GVI Forex 2]

EURGBP 30 Minute Chart – Weighing on GBPUSD

This chart would give chartists nightmares but EURGBP spike higher is why GBPUSD has struggled to hold a bid

HOW YOU CAN USE CROSSES TO TRADE SPOTFX

[GVI Forex 2]

GBPUSD 30 MINUTE CHART – Pattern broken

GBPUSD break of its 6-day pattern pivoting 1.25 has seen a shift in directional risk

This suggests support on dips, strongest if it stays above 1.2577 but as long as it stays above 1.2538

Next hurdle is US Services PMI as this is the last piece of key US  data with a quiet calendar next week.

Reminder UK is closed on Monday so this could impact trading.

[GVI Forex 2]

EURUSD 4 HOUR CHART – PATTERN BROKEN?

Barring a surprise in today’s US data, EURUSD seems set to break an 8-day pattern around 1.07 (similar GBPUSD 6-day pattern around 1,25), which would suggest a shift in directional risk to the upside.

This suggests EURUSD will likely find support on dips as long as 1.07 does not trade, a stronger bid if 1.0735 can become support.

On the upside, a firm break of 1.0753-57 would be needed to put 1.08 in play (note there is little on charts then until a 1.0850 trendline and 1.0884)

[SF Monedge]

I’m out flat now with the Gbp purchase at 2525.  May reverse, looking for long positions that stick going forward a week or so (cycle)

[SF Monedge]

Looks like Gbp stalls here around 2525 and head back toward 2500 for now.

[GVI Forex 2]

GBPUSD DAILY CHART – 1.25 PATTERN

Similar to the EURUSD 1.07 pattern cited earlier GBPUSD has extended its pattern trading on either side of 1.25 to 6 days in a row today.

Over this period there have been”

3 closes above 1.25

2 closes below 1.25

As I noted in EURUSD, the longer this pattern goes on the greater the chance of a directional move once it is broken.

Note today GBPUSD traded lower, helped by GBPJPY selling but the GBPUSD sell part was more easily absorbed than the USDJPY selling out of the cross (same for EURUSD selling more easily absorbed).

[SF Monedge]

My note on worker productivity is for the overall, not this report which moderated.  Gbp should inevitably begin pricing in Fed rate cut in the near future and target 2800 in my view.  Price activity is the sell side this morning but the complementing issues are bid, which is why I am selling euro but trying to position long in Gbp.

[GVI Forex 2]

WHEN YOU SEE TWO CURRENCIES TRADE IN OPPOSITE DIRECTIONS VS. THE USD YOIU CAN ASSUME THERE ARE CROSS FLOWS DRIVING THE MARKET.

NOTE TODAY USDJPY IS DOWN, AND EURUSD AND GBPUSD ARE BOTH LOWER.

As explained in the following…

How You Can Use Currency Crosses to Trade Spot Forex

How You Can Use Currency Crosses to Trade Spot Forex

[GVI Forex 2]

USDJPY 30 MIN CHART

It has been one way (all blue AT lines) since the bounce from yesterday’s intervention low (152.99)

It has not just been USDJPY trading down but JPY is firmer on its crosses, which has seen the uSD firm vs. the EUR and GBP.

.
‘

[SF Monedge]

I’m long Gbp 2480 which is very aggressive, likely moves further toward 2440 but locked so lets see.  If not, small tiny gain and reload deeper, or hold if it sticks.

[SF Monedge]

Labor productivity saw a slight increase which counters the slight increase in wages paid so it is creating a bit of a stalemate on the data.  Hence an initial lack of conviction in markets.  That may change as the day transpires.  I like the bid in Gbp on dips at least for now.  See dow futures trying for 38500+ inevitably.  Yields and such favor Usd overall in the bigger picture in my view so selling it is a bit of a contra-position.

[SF Monedge]

Stocks should try to hold the bid today, so far the participation is muted pre-market.  If the bid holds that helps Euro / Gbp vs Usd.

[SF Monedge]

Note regarding the Eur crosses.  EurUsd and EurGbp could catch a sticky bid in coming days which runs contra to the other two noted pairs of course.  That runs contra to the other two crosses, indicating that there is a lag between more dominant cycles changing in one of the two groups.