With several important economic indicators due to be reported today, there is a high likely hood of a fair amount of volatility to be expected … today.
At 9:00am GMT we got the CPI estimate for the eurozone. As this is a year-over-year report, there wasn’t anything surprising, but enough to begin to probably begin to push the EURJPY cross back down again at some point today.
At 14:00 GMT US Consumer Confidence is due to be reported. If this comes in as or better than expected, this will result in a strengthening of the dollar and almost certainly a sell off of euro. The net result of that action will mean more euro’s in circulation. That will likely weight still further on the EURJPY cross thanks to additional supply of euros causing a further unbalance in supply/demand, giving shorts still further profit opportunities.
Finally, at 23:30 GMT we have the Japanese Manufacturers Index and the Manufacturers Outlook. Almost no matter what happens with these reports, we can expect the new trading day tomorrow to demonstrate significant volatility in the EURJPY cross.
If the MI comes out as expected, then the downward momentum likely to occur today will accelerate significantly. If the numbers are worse than expected, then a hard bounce upward will occur.
Look to make short trades with tight profit targets through the European trading session ahead of the US Consumer Confidence release. Then, wait for a new trend to establish or the current trend to reconfirm before making new trades going into the US trading session.
Today, very early, a strong trend is likely to develop based on the results of Japan’s MI. Trades in the direction of the trend with 100+ pip profit targets should result in relatively safe profit opportunities.
About the Author
Danny Wall is President and CEO of 4 Squared Anaytics, LLC, a company that produces currency analysis for both institutional and retail currency traders.
He started in the banking industry by creating decision support computer systems, where he created a currency arbitrage system based on an entirely new data mining model that revolutionized how arbitrage was done at major international financial institutions.
Using the expertise and banking contacts obtained from that project, he got started trading currencies initially following a scalping system but gradually altered that to a longer term strategy with much higher profits. He now trades currencies full time, focusing on EURUSD, GBPUSD, USDJPY, EURJPY,and AUDUSD.