Volatility remains high as U.S. equities continued the tumble they experienced over the last few days. With stocks like Ford, Yahoo, DuPont, Amgen and other many major companies reporting earnings Tuesday volatility is likely to remain high. Then on Tuesday’s heels is the Fed announcement on Wednesday which should spread higher volatility into the currency market.
The EUR/USD created in interesting situation where we were looking for a close below Friday’s candle at resistance to provide confirmation of more bearishness. Well today it did close below the body of Friday’s candle but it only cleared it by 4 pips which is essentially meaningless. We will continue to watch for more bearish confirmation and a drop to support. (see EUR/USD below)
The EUR/GBP gapped lower on the weekend open and sold off from there taking back much of Friday’s gain. The move indicates that we took profit at the right time and are now watching for another bullish rally which should happen Tuesday or Wednesday. (see EUR/GBP below)
The GBP/AUD didn’t give us much to say as the pair had a very tight trading range and like the EUR/USD only traded 4 pips off its previous close. We are short this pair and will hold our position for now as we wait for it to sell off. (see GBP/AUD below)