EUR/USD: Reforms, Levels, Ranges, Targets

The new July 1st structural changes to currency markets are surrounded by news events and the vast majority encompass European news. If ever a time existed to trade news, now is the opportune moment. Between the ECB changes and current BOE reforms to Sonia, volatility and focus shifted to not only on European economic news events and trading but 8:30 am American news will lack the prior volatility as it was known for eons. Focus for the ECB shifted in American markets from 8:30 am to now concentrate on minor news at 10:00 am but also to the London Gold Fix. Its a volatility transfer from American to European markets. The purpose for central banks to now succumb to institute wholesale structural changes is to prevent exchange rate volatility. Its a plan desired and tested by central banks for many years.

As the new structure is viewed, news events will see the big move then correct and for the bulk of trading for the day, small ranges will be the order of the session. From a volatility perspective, central banks especially the BOE and ECB viewed markets from a 24 hour perspective then realized where and when the majority of trading occurrs especially the ECB as they are the least market friendly central bank on the planet. Since news events see the best volatility and those price movements cannot be prevented, the central banks concentrated releasing vital market moving data around news events to allow the big event for the day then ranges occur. Why 10:00 am is perfect is not necessarily the Gold Fix but all central banks swoope in the markets around the noon day. Further, 10:00 am may absolves the ECB of its traditional worldwide leadership role from 8:30 am or possibily its part of the overall new time change structure in currency markets. ECB changes are in day 4 and the BOE is in progress so we’ll see how the resolution works further in days ahead.

The big EUR/USD line remains 1.1153 and a must break to go hgher yet hurdles exist. The first break points for today exist at 1.1080, 1.1084, 1.1088, 1.1093, 1.1098 then 1.1103, 1.1111, 1.1144 and 1.1153. Why 1.1153 is vital is due to breaks target next 1.1204, 1.1222 and 1.1225. All week 1.1153 will remain the big line break to move EUR/USD higher.

The big base for EUR/USD is built on 1.0897 against today’s bottom at 1.1003. Yet again many rough break points exist first at 1.0938, 1.0921 and 1.0915. Neither 1.0900’s are expected to be sen today, its a rare day for a bottom to break lower and certantly not to 1.0938.

Brian Twomey, Inside the Currency Market, btwomey.com. Interested in trade signals? my guys are stacking money everyday. contact brian@btwomey.com

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