I’d like to examine the EurUsd and give some brief scenarios of what may occur as we get closer to Christmas Day. Today, we have a few minor US announcements until 9am central when New Home Sales are released. The prevailing current trend is down for the pair. However, none of these announcements carry the same gravity as the real majors: 1) FOMC Statement 2) GDP 3) Non-Farm Payrolls.
As one looks at the 1 hr chart, you can see that we’ve had a 24 hour period of rather tightly spread consolidation. Price is currently swinging around a major Quarter Point @ 1.4250 where it’s forming a base. As the news comes out from these announcements, we’ll be looking for some potential whipsaws. And, depending on the number reported on New Home Sales, at this point, it’s difficult to forecast which direction price is likely to move. Only a large numbers report deviation would cause price to exceed the last swing high @ 1.4332 or to the swing low @ 1.4218.
IF traders start taking profit as we near the Christmas Weekend early, then we could see price move higher, in spite of any good number. So, just be aware of a counter-move potential that just doesn’t seem to make sense. A prudent course of action would be to wait until after the announcements and allow the market to settle. However, markets often times do not present that luxury. With such an indeterminant situation, we’re choosing to stand aside for now.
Also, and this has been mentioned a few times this week, liquidity is thinning out as we approach the Holiday and it’s not always the best (or safest) time to trade. So, let’s be careful out there today.
