BRIEF: Market Insight Before ECB

As the market prepares for ECB Mario Draghi's much awaited remarks in the European markets for the ECB rate decision. While in the Asian session heading towards the major session in Europe and the US have turned again into bear territory after starting off with a relief recovery.

New Lows not only in the DOW & SP500 and the other global indices; the currency market has indeed came through with CABLE marking three consecutive new lows with the latest @1.4125. Meanwhile, its correlated EURGBP Cross rates have also marked its new High @0.7755 before making a pullback @0.7650 reflecting some profit taking for the day. This has been an effective well worth the risk analysis which we have made to this date. But a cautious play should be observe as the ECB rate is on hand. However, its the remarks of Mario Draghi that may trigger a different tone moving forward.

BTW - These exceptional moves and market conditions are best approached going beyond charting systems and price action analysis. 'Secular Market Forces' have been present for some time now from our countless information sharing emphasizing due diligence on market behavior. Tools of technical trades are effective but not as effective during these kind of market movements. Take the extra caution in trading the market. Only the best for your trades!

EURGBP CROSS RATE: https://dwq4do82y8xi7.cloudfront.net/x/ESdFFXNW/

EURO Rallys On ECB Draghi

@MegaTrade101 Ride a Continuing Trend!

When USD softens on a pullback the AUDUSD will continue its trend. But today's statements from ECB Mario Draghi have brought such disappointment of not delivering what was expected have provided a nice bounce back higher for the EURO near the 1.0900 and drove the 1st decline for the USD @98.62 session low. Its was the Euro's turn to shine back into the spotlight until Friday's NFP #'s.

Euro Chart on Cloud

The market reaction where more correlated with the European majors and crosses but not as much as with the Asian currency pairs and their relative cross rates. Media highlights were so centered on a more active move from the ECB, as they were all expecting a 'shock & awe' with the ECB transparent guidance on addition more stimulus was really played out well to their advantage. But still got the awesome rally of the EURO.

Thus driving the initial decline for the USD along side disappointing bearish US reports leading to an even lower price touching 97.60 basis point. Meanwhile, the spill over effects on CABLE were relatively milder with a modest bounce @1.5155/60 levels.

The direct effect on the Euro were affected with short-covering rallies have added to some decent profit-taking for previous trades taken the past week. The market were pretty much mix after the price swings brought about from the press conference.

Euro & USD Reacts In Counter Trend Direction

At the back of ECB President Mario Draghi's comments that the ECB is flexible enough to sufficiently address QE whenever necessary has provided the initial market move for the EURO back below the 1.1300 and currently @1.1245 to this writing.

Likewise, supporting the actual session high for the USD has been the lower than expected Jobless claims that has been favoring job sustainability. An easy way for a double whammy for a USD rally has had bull traders adding increased interest in moving the USD price recovery at a pace contrary to its recent decline at the middle of the month ending the 14th of October. However, a cautious approach should always be in check as the monthly configuration on the USD could change as we move forward to the end of the month's trading.

This price recovery of the US Dollar Index (DXY) is the start of a renewed recovery for as long as momentum can be maintained: backed by an increase in volumes near the closing of the week. The 96.05 - 96.50 basis point range levels would be the first line of resistance to hurdle for as long as no major pullbacks would occur towards the end of the week's trading session.

And with that said, whenever the trade set-up plays within this conditions, and with the EURUSD failing to make a stronger come back towards its previous high nearest to 1.1515/20 levels, the probability of a near term decline called dated 9.30.2015 is in the making. As the market volatility turns direction for now closer on a weekly basis as reflected by its price action. Current low for the session is @1.1180 and hawkish market sentiments on the Euro prevails.

CCY Corner: EURO / USD

The kinds of statements ECB President Mario Draghi makes dictates the tone of the Euro as the weaker outlook for the region have again pushed the common currency back towards and below the 1.1200 levels. And this has supported the US Dollar briefly as market sentiments have found bulls a valid reason to stay positive as the US - DXY have stayed within its current levels and formation. However, the focus would be the data on Non-Farm Payrolls would take over the spotlight as data survey has been favorable and would lift the USD whenever it beats market expectations. 

CCY Corner: EURO / USD

Insight on Cross Market Strategy

Dow Jones US Dollar & Euroepan Majors:

Since the general price action in the European majors made a run and with Stocks across the board have pulled out ever so closer from its consolidation, by the end of the trading week would provide a relatively good market daily session pullbacks for position adjustments and settlements. There is no sense to speculate or contradict an established trend that has been defined for some time. This also goes the same with the Dow Jones and the other major indices that has gained back their footing from a consolidation. 

This is of course whenever a surprising market element that would ignite a market breakout for the Dow Jones would not be discounted.

       Insight on Cross Market Strategy

Market Insight ll - CCY Stocks & Indices

There is only so much that 'Smart Money' can take from the market! Let's see who stands tall with the last one standing! Finally NASDQ 5000 Market and Price call we made last December have came through!

A busy schedule for the week is expected that should bring back some market volatility. The US Dollar got some good support with China’s move on lowering its rates in line with its previous move for banks to stimulate its economy. After Greece, investors are now focused on the continuing direction of the US Dollar. 

This week’s market events would relatively be good for the USD which may include some mix reports on the jobs report more likely to happen and ECB President Mario Draghi’s tone on his next Cyprus press conference which would weigh more on the Euro’s price action. A slight price recovery after setting a new price low for the week @1.1158/60 levels have proven to be an initial daily support. Currently @1.1220 had limited market impact ahead of the probable catalyst coming from the expected comments by the middle of the week. As market participants would clearly take some clues from the USD direction more than ever.

Market Insight ll - CCY Stocks

CCY Corner - EURGBP XRate & DXY

The Euro's decline continues as the ECB reports on QE have already been confirmed with an expected boost with a total amount of USD1.2T or an equivalent of 60B Euros monthly until September 2016. This has been the driving force of the markets where the highlights of market moving events have been dominated by central bank moves. A list of CBs monetary policies entering the 2015 is seen as a follow through were efforts of central bank decisions to control EU deflation or tame global inflation played well. 

Prices in the foreign currency market have been driven by these fundamentals more than a real free-flowing market. As we have mentioned that these are exceptional times with the US Dollar taking the lead currency pair in value among all of its global counter currency pairs. 

With that said, the choice of the EURGBP Xrate for the start of the year have seen a gradual decline because of the market's critical price levels and tensions created from the ECB QE program. And much to these Central bank moves; China's market talk of a similar move from the SNB would eventually curve a niche to stay competitive in value and keeping in check with global trade against declining foreign currency value. Somehow CCY value would have to find an equilibrium levels until such time when the USD would have to adjust from its current strong value.

CCY Corner - EURGBP XRate

Perspective & Insight: EUR GBP JPY Majors & Crosses

On a 'Grand-scale Price Action Analysis'; there exist a similar view where the Euro/Yen (EURJPY) cross rates & USDJPY shows a directional market significance particularly with Asian traders. With the Euro's slowing inflation rate there is much to anticipate that the extended market consolidation on the USDJPY may soon prove to be a worthwhile waiting game for some positively motivated Asian traders & investors.

The daily & weekly price consolidation on the USDJPY remains to be @101.05/10 (S1) to 102.60/80 (R1) since February 2014. While the USDJPY held these price range; Sterling's ability to hold versus the Japanese Yen (GBPJPY) has had the similar effects of the run from a low @137.80 in 03.2013 to this period today @173.30. And much of the currency pairs traded have evolved around these pairs alternating moves as trend-following strategies where applied.

With that said, most US & European investors have been trying to weigh & setting aside a lot of market distortions from the geopolitical tension lingering-on in the European & Middle-East conflicts while still focused on the recent correction on the Dow Jones & S&P markets. And somehow manages to pullback from their daily low ranges and likewise finishing the day sessions with barely a double digit decline. These moves are part of a technical price alignment primarily based on the recent reports for jobs and a surprising housing contraction that led the pace for the decline.

To a certain extent that this similarity had also occurred with the overall picture perfect for Cable after a wide trading range breakout beyond the 1.6745/60. And registering a high @1.7192 before the current corrective move to as low as 1.7035; while the EURUSD recent high @1.3700 on 07.01 have prompted the single currency pair to its present lower levels @1.3522 as of this writing. As both majors have shown their respective resiliency to stay above these levels, one can not discount the probability that these currencies may still hold some underlying strength in moving forward contrary to its corrective phase which is likewise still in the making. Key levels to watch for CABLE still remains @1.6970-1.7000 range support and as for Euro is initially set @1.3450/70 to its current market rate @1.3520.

Highlights for the Week

Jul 23   
Australia Consumer Price Index 01:30 GMT     3.1% Consensus     2.9% Previous
Bank of England Minutes
08:30 GMT
Bank of England Gov. Mark Carney Speech
11:45 GMT
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