Dollar Strength Creating A Dead Cat Bounce in EUR/USD?
Not much on the economic data front today. Given the still "lower volatility", that means trading ranges could be light. Before we get to technicals, let's preview next weeks calendar. OK, that was fun. Meaning, pretty light calendar aside from unemployment claims and a smattering of foreign central bankers talking. But, we do have the Greek Parliamentary elections on June 17th, so you may see some squaring up of positions ahead of that late next week.
Technically, the SPX is well above its 1270 lows. Hopefully we hang in there next week and trade sideways to up. Given that we rallied almost 60 points from that 1270 low up to almost 1330, it doesn't seem far fetched that we are backing off a bit heading into the weekend. After all, the economic news hasn't improved since last Friday's unemployment report and we all know the reason we rallied is the "possiblity" of future central bank intervention.
Furthermore, a few days ago I talked about the 38% area possibly acting as resistance. We are below that level but bumping against the old trendline that was resistance. Could it possibly provide support?
On Friday's in forex, I am looking for the LUNCH RUN TRADE. Given the tight ranges that I am seeing (25 pips over the past 4 hours in GBP/USD), it might be an early exit. I do have a bearish bias though in equities and if we do start leaking to the downside, the low of the day at 1.5400 in GBP/USD could easily be taken out. On the other side of that, if we rally in the GBP/USD, I may be interested in looking at possible areas that are overbought as the USD is in control today, trending higher against all cross pairs.
In the EUR/USD (and it looks similar for the GBP/USD too), the bounce off our lows was very small. Could this be the "dead cat bounce" and could we be headed lower in equities and in the EUR?
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