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| Posted: 02 Jul 2009 12:38 AM PDT Expect the Unexpected Written By: RetailFX Dealing Desk AS market trade is mostly in range investors focus most of their attention on the vast economic data from the EU and the US which is expected to be published on Thursday .The bombarding of data includes most of the important indicators in both the US and the Euro zone packed in just one day! The data publications which includes the ECB rate decision, the unemployment rate in the US and the EU, the ECB chairman Trichet speech and the US Average hourly earnings, each publication reflects an important aspect of the Economy and has the potential to create much volatility by its own. But packed together you get a snapshot of the economy’s health in just a few hours that could either snap the bullish momentum or ignite another strong rally. Either way the potential of data with such impotence packed together can generate much unexpected movements and strong swings. Why Investors are worried? Since the end of Q1 investors moved rapidly from fear and subdued risk appetite to optimism that the economy is close to stabilize and generate growth in 2010.Since investors expectations changed so dramatically so did market pricing, the S&P and the Nikkei indexes rallied around 40%, Oil rallied a staggering 100% and the Sterling which is strongly linked risk as the currency virtually collapsed when the credit crunch was at its peak rallied 20% from its lows. However with unemployment across the globe still expanding rapidly, industrial production falling and housing prices subdued investors keep asking themselves is this recovery for real? Is the rally sustainable? Only this week the UK sharp drop in GDP of-4.9%, the fall n Japanese industrial production falling more than 30% YoY and the Japanese unemployment which stands at 5.2% a five year high it seems realty has once again tapped investors minds and remanded to whom has forgotten that the risk of another downturn and a retreat in risk appetite is very much there and could be sparked at any moment. A day packed with data such as this Thursday is definitely a good contender to create such a spark. What can we expect from the Unexpected? The pairs of the USD/JPY, EUR/USD and GBP/USD will trade very nervously and with the currency market mostly in rage a stream of extremely negative data or a surprisingly positive data has the ability to break the flat trend in the currency market with the USD and the JPY railing if investors fears will be realized and the GBP, the EUR and the Ausssie railing if the latest optimism gets a real backbone. The Trades to watch for: EUR/USD
The pair is currently trading flat trimmed in the range of 1.38 to 1.42. A daily close of either above the 1.42 level or below the 1.37-1.38 level could break the flat trade and generate substantial swings. A break of the 1.37-1.38 support could move the pair towards an adjustments of around 300 pips to the 1.35 area will a break of the 1.42-1.43 level could generate momentum for a retest of the 1.5-1.6 target. GBP/USD
The pair is trading at a tight range from 1.62 to 1.67.The recent failure to break the 1.67 resistance might signal the pair is gearing up for an adjustment after a long bullish cycle since March this year. A break of the 1.62 support could generate a bearish correction with a target of around the 1.58-159 level. A break of the 1.67 level could generate another bullish momentum however the proximity to the 1.7 resistance could limit the potential of the trend EUR/GBP
The pair which has been one of the most noticeable bearish trends might be heading for a halt in the trend. The double bottom at the 0.84 area alongside the Sterling latest tendency for weakness could push the pair for a retest of the bearish trend line. A break of the bearish trend line could subdue investors from selling the pair for a while and the pair could rally toward a retest of the 0.9 resistance. The events to watch
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