Wednesday, August 22, 2012

Forex Update: EURUSD & GBPUSD Breakout

Coming Up Today
  • CAD Retail Sales
  • USD Existing Homes Sales
  • FOMC Minutes
Coming up today, Forex traders will be focusing on the FOMC Minutes. A quick recap of the Fed’s actions; with the world expecting the central bank to go the way of QE3, they have held back on applying this strategy. This has been the even though they admit that unemployment is a problem and the EU’s financial problems are slowly effecting the US economy. Therefore, Forex traders will be looking for any clues whether any members in the Fed are starting to lean towards new stimulus. If not, than it could lead to weakness in equities which would be dollar bullish.
Elsewhere, we are seeing breakouts in the EURUSD and GBPUSD occur. While statements the ECB hasn’t confirmed the weekend’s report from German newspaper Der Spiegel that the ECB would put a yield cap, rumors in the market appear to be backing up the plan. Charts to Watch GBPUSD: We’ve been following this pair for a while. Specifically the long term trading range between 1.5450 and 1.5750. Currently, the pair has broken above the higher band to 1.5800 this morning. As such, after sitting in such a tight range for so long, there could be momentum for a continued breakout towards the 1.6000 level.  
  EURUSD: The Triangle Pattern that was mentioned on Monday has officially been broken to the upside. As such, as long as the 1.2400 figure holds, sentiment in the pair will be to the upside. With bullish momentum forming, any new positive fundamental news from the EU could lead trigger a quick spike higher.

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