EURUSD : "Faites Vos Jeux", Place your Bets!

This week is THE WEEK and today is THE DAY with the Non Farm Payrolls (NFP), market consensus at -105K, and the Non Manufacturing ISM index both later today. This morning (in Europe), I feel a bit like at a casino, putting my chips on a roulette table: "Faites vos jeux", place your bets, come and place your bets on the EURUSD at the giant Forex Casino! It seems that the whole market awaits and the EURUSD has been stood still in a range between 1.2800 and 1.2830 since the ECB yesterday, it's now trading at around 1.2840.

I have to confess one thing to you, Fellow Trader: to be totally frank and straight to the point, I have no idea of where the market goes and no specific view on the EURUSD today. Hold on! Don't click on "Back" on your browser and try to find a serious trading site that will give you a good forecast yet, I can argue on this: first, and once again, I'm not an economist nor an analyst and my job is not to forecast, my job as a trader is to make money from the markets. Whether I'm right or wrong on my opinions doesn't matter provided I'm right in my positions. Secondly, I'm not the only one who doesn't understand the current action of the EURUSD: a couple of weeks ago I had drinks with a "FX weatherman", a research guy who gives his bank's FX forecasts on Bloomberg TV, CNBC,... And this chap confessed that the EURUSD was pretty unpredictable. Let me write it again: the professional forecasters CAN'T forecast the EURUSD His argument is that there's a lot of noise on the star of the currencies pair and analysis on minor currencies was easier and more definitely more “clean” : AUD, NZD, SEK etc. Well that's his words, not mine and once again, it was in the middle August, this could have changed.

OK I've no view but as you may have guessed I'm in a mood for gambling and I will place a bet before the dealer says no more bets or "Rien ne va plus". As the USD is a safe haven, the EURUSD is pretty correlated to the stock markets (currently its correlation with the SPX is close to 80%), but as posted in a previous post of mine, I've noticed two cases during the past few months when, after the release of important US figures, that correlation broke and triggered a very strong move on the EURUSD, the kind of thousands-of-pips trips. The first move I refer to occurred in December 2009 with a positive NFP that sent the currency pair from the gates of the 1.50-mark to 1.40 then 1.20 (the PIIGS crisis helped a bit for the second part...) and the second move in July 2010 and bad ISM figures sent it from 1.22 to 1.32. Further to this, I will play the de-correlation between the EURUSD and the stock market and my bet is as follows: I bet the NFP and the ISM will be strong positive surprises, despite the rally this week, I think too much negative news have been discounted since the end of August and the plethora of bad news on the USD economy and this will strengthen the USD, sending the EURUSD in a strong move down while it is expected to grow in such a case (and may do so at least just after the news). The way I will trade this is though an order (so for now it's a free bet): a bit before the release of the figures, I will place a short order between 0.5 and 1-ATR below the spot, that will be executed if a strong move down is initiated.

So my Fellow Trader, place your bets, the ball is going to be thrown very soon... TLofT be with You and Good Luck!

EURUSD (source: IFRMarkets)
1.3000 Psychological Level
1.2923 Daily High Aug 18
1.2910 30-Day M/A Line
1.2856 Sept 01 High
1.2846 10:40 GMT FRI 03 SEP
1.2800 Psychological Level
1.2776 Daily Low Sept 02
1.2744 Daily High Aug 31
1.2722 10-Day M/A Line

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FYI As this post is published: SPX 1090 // SX5E 2731 // NKY 9114 // DAX : 6108 // EURUSD 1.2842 // USDJPY 84.47 // XAUUSD : 1252