06/03/2014: Trading outlook for today

The unenviable task of a trading outlook in front of the Bank of England and the ECB…

EUR/USD is stuck now in an even tighter range that yesterday. Then it was 40 pips, today (so far) in front of the ECB rate decision the pip range from the low to the high is 24 pips (although upside pressure is growing now).  For now we await the breakout, watching $1.3706 and $1.3746 as the initial levels (i.e. yesterday’s low and high). Intraday momentum has been basically giving no indication for almost two days now. Surely the ECB rate decision will create some volatility and some direction in this chart. One can only hope!

GBP/USD is using the $1.6700 pivot level as the basis of support now so I remain slightly on the bullish side of neutral. Intraday indicators are giving very little clue and there would be a move on the Bank of England rate decision (which is not expecting any surprises). Weekly jobless claims at 13:30GMT with 338 expected, a number that disappoints should help to boost Sterling.

USD/JPY has hit against the underside of 102.83 once more this morning and again just shied away. It is currently ranging above 102.59. As I said in the Morning Report, the range remains intact until it is broken. So while the rate continues to struggle underneath 102.83 the opportunity is there for short positions to continue to play the range.

Gold is another instrument that is ranging – for the past 48 hours now. I continue to view the falling 55 hour moving average as thebasis of resistance, now at $1336.50. A confirmed move below $1331 would open the $1319.61 low. I am increasingly of the opinion that this is a consolidation before a correction lower, with the bearish divergences on the daily momentum indicators and intraday hourly studies also suggesting increasing downside pressure. However whilst the support around $1331 remains intact, this consolidation continues and it is difficult to say.

Of the European equity indices it is the CAC 40 that has been leading the way. The S&P 500 in the US has been pushing higher and the CAC is the only one of the three key European bourses to follow suit. The DAX remains stuck under 9599 and the FTSE 100 needs a move above 6827. I am therefore near term bullish on S&P 500 and CAC 40, whilst being neutral on the DAX and FTSE 100.

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