Looking at the Thursday session, we have to economic announcements that could impact trading. We have the European Central Bank with its interest-rate decision, as we also have the Bank of England and its interest-rate decision. These will influence the representative currencies more than anything else, but at the end of the day the biggest problem we had with getting too excited about it is that the nonfarm payrolls come out on Friday. With that, we would anticipate a little bit of volatility in the EUR/USD pair more than anything else, as we have broken down. We look at short-term rallies as put buying opportunities.
Looking at the gold markets, we continue to bang around just above the $1200 level, and we think that if we can get above the $1220 level, calls can be bought heading towards the $1250 level. On the other hand though, if we break down below the $1200 level, we feel that the market will more than likely head down to the $1140 region, offering put buying opportunities going forward.
We are staying clear away from the US stock markets in general, the day before nonfarm payroll typically is fairly quiet after all. Nonetheless, we look at pullbacks as being likely, and should represent value going forward. We have no interest in buying puts, and will only buy calls in these markets as the NASDAQ, the Dow Jones Industrial Average, and the S&P 500 have all performed fairly well.
The USD/JPY pair tested the 120 level during the session on Wednesday, and we feel that a pullback from here is likely but it will only be a short-term momentum building exercise. Ultimately, we are buying calls on supportive candles below, and believe that the 115 level below there is the absolute floor in this market and we have no interest in buying puts.
