Bernanke Spurs USD Ahead Of European PMI And UK GDP

Heavy data day, today, provided some interesting price action.
First up more poor economic data out of the UK continues to weigh on GBP/USD and the pair sunk in early trading. Thursday sees more UK data in the form of GDP figures, and below-par numbers would point to a full house of terrible data this week and the Pound could drop again.

The key risk event today, however, was Bernanke's testimony in US, as market participants were anxiously looking for clues as to whether the Fed will start tapering off asset purchases. Despite the initial doveish comments, Bernanke's testimony turned out to be rather hawkish and potentially points to a winding down of asset purchases over the summer period. That allowed for swings in the USD: first a dip followed by renewed strength, resulting in some interesting price action well set-up now for the next two days of key risk events.

Tomorrow is another big data day as early European PMI and UK data could set the tone for the day until potential comments from Draghi at 8:30 pm GMT. Further weakness in economic data could result in additional gains for the US Dollar. However watch Draghi's comments as he has a habit of driving the Euro and risk-on/off quite quickly.

EUR/USD
Euro almost playing out like a text book testing the 1.3000 handle before dropping lower; we suspect the next couple of could be rather choppy in the pair but we could easily see further weakness in this pair and we continue to like shorts below 1.3000.
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Strategy wise we continue to like looking for shorts on high stochastic crosses, on a daily basis though the price rejection of the move higher today could offer good breakout plays from today's low or shorts around the 1.2920 mark
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GBP/USD
Pound continues to look weak and poor GDP figures tomorrow could spur another sell off, however, slightly better numbers could provide a bit of relief in the interim as this pair has been sold quite hard recently and with 1.5000 previously providing some support it take a small bounce initially before continuing a leg lower.
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If we get a weak GDP number we like the idea of looking to short this pair below the 1.5150 mark, potentially entering the trade prior to GDP figure with the view of closing if the figure comes out better than expected.
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Otherwise a clear break of the 1.5000 handle would also offer good short options.

AUD/USD
Aussie continues to look weak but at the same time feels well over due a slight correctional bounce to clear out some of the order book.

Breaks above the 0.9850 can be used to buy towards parity on strong moves, otherwise we prefer looking below the parity level for Shorts although would prefer to see a pull back before adding to short at these levels.
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In reality we could easily see this pair set-up a new lower range for the time being to clear out some of the orders. Potentially the 0.9625 / 0.9670 up towards the 0.9950 level could offer a good initial play; rejections off of these key level could be interesting options for trading the range; breaks of these levels could offer further moves, with upside movements further capped by parity.
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