Breakfast Blog

Top of the Risk Management Morning Traders,
The main headline from yesterday had to have been the Dow Jones 30 closing at all time highs. Driven by Optimistic Chinese Growth projections and strong European PMI's during the morning session. The American stock market was bulling to go higher when it opened at 14 30 GMT and grinded higher until the release of the ISM Non-Manufacturing Index at 15 00 which was extremely strong at 56, this sent the American Bourses surging with the Dow nearly hitting 14300 and The S&P 500 at 1545. The two ISM numbers are a very good indicator for the Big jobs report on Friday The Non-Farm payrolls.
All the indicators are pointing at a very good number and this may be the catalyst needed for the S&P 500 to  take on the all time highs of 1576, Because at this stage the Market is to close and seems too bullish not to at least attempt these higher highs.
Today has the potential to be a quiet day with some profit taking ahead of the BOE and ECB interest rate decisions tomorrow and the press conference where we will be listening out for any dovish comments or potential cuts or additional QE from King and Draghi. The EUR/USD is intriguing at present because it has arrived and based at a very significant level of 1.30 and doesn't want to go bounce or sell off. It is perfectly poised to start a new cycle and Tomorrow will definitely give us some direction for the coming weeks.
Dovish comments from Draghi will most likely lead the Euro to test the 200 Day Moving Average which comes in at 1.2840. A break of this would lead to a test of 1.269(the starting point of the rally to 1.37) and 1.25 if this broke. Any hawkish comments from Draghi may give the Euro a bit of a boost in the near term but from a technical perspective a rally to 1.33-1.34 would look like a massive head and shoulders on a daily chart with the next leg down to 1.269.
What we believe may well occur in the next couple of days is the Euro taking a new leg lower from a combination of dovish comments from Draghi and some strong data from the States which will prompt questions about tapering QE.
Some good levels to look out for in the EUR/USD are 1.3080 topside and 1.2980 is solid support for the time being on the downside.
From an Equity perspective we may see some profit taking ahead of the important events tomorrow and Friday so we would not advise any position today.
Good luck in the Markets. Lowkey