The initial reaction from the Asian & European markets prior to the opening for the US North American session on the stocks were higher across the board; yet the USD have been pushing lower with position adjustment for the new month are being carried out in the forex market. This is in response to the positive news coming from Washington of a deal made and avoiding the first -probable default by the US government.
That initial market behavior could well be attributed to major players price adjustments with the continued corrective move of the Euro with extensions at the 1.4452 high along side the 0.8803 registered high of the EURGBP cross rate. With so much negative sentiments looming in the airwaves prior to the opening the excitement on the floor could not be helped and get noticed while a price turn around for the EURUSD after the opening bell was underway. The next best question would be for how long would this USD recovery last?
Based on our previous market review dated the 30th of July; the USD Index below the 73.85 -74.40 range surely signifies a continuation of the bear patterns. However, maintaining our bias EURGBP short side of the market has kept our commitment to maintain the position and place corrective stops whenever prices do move higher. The initial break from the USDX range above the 75.10/20 basis point would provide a leg higher and a probable follow-through when volumes do pick-up. This could only happen whenever positive news would come from either the NFP and unemployment figures this Friday. Although, prior to this are the reports for the BoE & BoJ rate decisions and the earlier retail sales figures from the Euro zone that would be well anticipated. However, the earlier week's report on the US GDP would not be discounted overall and would weigh in if the figures would be negative for the week end. Which means that only a close for the weekending the 5th of Aug above the 74.45-75.10 basis point range would re-affirm bullish institutional players to build-up momentum in the successive weeks to follow. Unless, of course a negative report would prevail before then.
A complete report and analysis for the EURUSD and EURGBP can be found on our market view report on the website.
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