EUR/USD
The EUR/USD logged some impressive gains on Thursday, and is inching above our 2nd tier downtrend line on Friday. The EUR/USD exercised its positive correlation with U.S. equities, ignoring the extremely negative industrial production data from Germany. However, we expect some near-term profit taking coming up as the currency pair struggles with our 2nd tier and the highly psychological 1.30 level. The EUR/USD still faces February highs with EU retail sales release pending. Despite the fundamental obstacles ahead, the EUR/USD has made some considerable moves to the upside. That being said, the currency pair is not out of the woods yet. Our 3rd tier downtrend looms, and investors are waiting to see if the S&P can follow through on its rally before committing to a substantial uptrend in the EUR/USD. Fundamentally, we find support of 1.29120 with additional supports resting at 1.2881, 1.2857, and 1.2834. To the topside, see resistance at 1.2965 with additional resistances hanging at 1.2996, 1.3022, and 1.3058. The EUR/USD is currently exchanging at 1.2923.
GBP/USD
The Cable also followed U.S. equities higher, propelling from our 1st tier downtrend line and back above the psychological 1.40 area. However, the GBP/USD is backing away from our 2nd tier downtrend line as we speak, showing hesitation as investors await the S&P’s next move. The Cable has climbed back into the bottom of the February trading range, a positive development for the currency pair. We anticipate some consolidation from the GBP/USD today with no economic data releases from Britain. Additionally, we anticipate a near-term struggle with 1.40 and our 2nd tier downtrend line. All eyes will be on the consumer sentiment release from the U.S. today coupled with the conclusion of the G20 meeting. Fundamentally, we find resistances of 1.4062, 1.4112, 1.4155, and 1.4199. To the downside, we see supports of 1.4008, 1.3975, 1.3932 and 1.3903. The GBP/USD is currently exchanging at 1.4033.
USD/JPY
As anticipated, the USD/JPY continued its consolidation as investors contemplate a retest of the highly psychological 100 level. The movement of the USD/JPY will likely depend on whether U.S. equities can prove this is more than a bear market rally. Meanwhile, our 3rd tier downtrend line is creeping towards present price, so the USD/JPY will have to make up its mind soon. The near-term trend of the USD/JPY hangs in the balance, and we would not be surprised to see the currency pair wake from its slumber either today or the beginning of next week. Fundamentally, we find resistance of 99.05 with additional resistances hanging at 99.96, 100.69, and 101.53. To the downside, our 98.25 resistance turns support while we maintain our additional supports of 97.66, 97.22, and 96.59. The USD/JPY is currently exchanging at 98.26.
Crude Oil
Crude posted huge gains on moderate volume Thursday as U.S. equities experienced another large movement upwards. As predicted, Wednesday’s selloff in reaction to higher inventory levels was overdone, and the shorts paid for it yesterday. Investors are gearing up for Sunday when OPEC will meet with another production cut in the works. Crude futures leapt above our two uptrend lines and our 1st tier downtrend line. However, our 2nd tier downtrend line is presently weighing down on the futures. Even if the crude futures can put together another solid rally today, they still face the psychological $50/bbl level, and it wouldn’t be surprising to see the futures selloff on the news of OPEC cuts. We cannot forget there is still a massive downtrend at work, and crude futures will ultimately need stabilization on the demand side for price to truly bottom. The U.S. will release consumer sentiment data today which should have a considerable impact on equities and crude futures since consumption has fallen off a cliff during the crisis. Meanwhile, if crude futures can pop above March highs we could see large near-term gains. Fundamentally, we find supports of $46.24/bbl, $45.24/bbl, $44.89/bbl, and $44.29/bbl. The $45/bbl area becomes a psychological cushion with $50/bbl serving as a key psychological barrier. To the topside, we see resistances of $47.09/bbl, $47.26/bbl, $48.36/bbl, and $49.14/bbl. Crude futures are currently trading at $46.66/bbl.
Gold
Gold leveled off on Thursday as surging U.S. equities tempered the recent bull-run in the precious metal. While Gold sits above our 1st and 2nd tier uptrend lines, the 3rd is still an arm’s length away. Gold seems to be at a critical point concerning its near-term trend. If the precious metal can’t fight above March highs, then Gold could very easily dip back into its downtrend while equities continue their impressive rally. On the flip-side, if the precious metal can climb above March highs, we expect large near-term gains and a continuation of the up-trend. Gold has the psychological $900/oz level to defend itself from any exacerbated sell-offs for the time being. Fundamentally, we hold our resistances of $928.57/oz and $932.04/oz, with fresh resistances hanging at $932.42/oz and $943.97/oz. To the downside, our $922.92/oz and $919.01/oz resistances turn support while we maintain our additional supports of $913.80/oz. and $909.89/oz.. Gold is currently trading at $922.50/oz.
S&P
The S&P futures posted another impressive rally on Thursday, following through on Tuesday’s furious bull-run. The large movement upwards came in reaction to Citi and BofA reiterating they are presently sound financially, and will not need to be nationalized to stay afloat. Additionally, Obama gave what can be considered a ‘business-friendly’ speech, emphasizing the need for reform while keeping the entrepreneurial spirit intact. Finally, retail sales showed an improvement, declining only 0.1% versus estimates of a 0.5% decline. Investors ignored another discouraging unemployment claims release, which we view as a more relevant indicator of the economy’s health. Germany continued its week of alarmingly negative data, showing industrial production decreased by 7.5%, nearly 130% worse than analyst expectations. Therefore, we can attribute Thursday’s gains in the S&P futures to little more than psychological assurances from Obama and the major banks. Though the sign of leadership was sorely needed, we have seen little concrete evidence to alter our negative outlook on the S&P futures trend wise. While we expected a follow-through from Tuesday’s gigantic gains, investors will need substantial evidence to fully commit to an economic recovery in the U.S. Unemployment and foreclosures are still rising and global production is in a freefall. The U.S. will release heavily-weighted consumer sentiment data today and Treasury Secretary Geithner will address the G20 conference. The S&P futures still face our 3rd tier uptrend line, and we can easily plot a 4th tier on our chart of the situation calls for it. Hence, U.S. equities still have much to prove to continue their ascent to 800. Fundamentally, we find resistance of 760.75 with additional resistances hanging at 771.5, 778.75, and 785.5. To the downside, we see support of 750 with additional supports sitting at 740.5, 732.75, and 722. The S&P futures are currently trading at 757.75.
30 Year
The 30 Year T-Bond futures experienced profit taking on Thursday, ducking back below our 2nd tier downtrend line as U.S. equities flourished. Despite the decline, the 30 Year futures remain above our uptrend line, and will likely wait to make a serious directional decision when our 2nd tier downtrend and uptrend lines reach their upcoming inflection point. Meanwhile, the futures remain wedged between the trading zone built since February. However, once the 30 Year futures do make a directional decision, expect large and sudden movements. China is filling the news wire expressing concern over the safety of U.S. Treasuries. These statements are exacerbating worries of demand drying up, raising interest payments and lowering price. Hence, we see the 30 Year futures on the decline in the near-term. Fundamentally, we see resistance of 127.91 with 2nd tier and top-end hanging at 128.562 and 129.172, respectively. To the downside, we find supports of 127.422, 127.016, 126.641, and 126.078. The 30 Year Treasury Bond futures are currently trading at 127 13.5.
The EUR/USD logged some impressive gains on Thursday, and is inching above our 2nd tier downtrend line on Friday. The EUR/USD exercised its positive correlation with U.S. equities, ignoring the extremely negative industrial production data from Germany. However, we expect some near-term profit taking coming up as the currency pair struggles with our 2nd tier and the highly psychological 1.30 level. The EUR/USD still faces February highs with EU retail sales release pending. Despite the fundamental obstacles ahead, the EUR/USD has made some considerable moves to the upside. That being said, the currency pair is not out of the woods yet. Our 3rd tier downtrend looms, and investors are waiting to see if the S&P can follow through on its rally before committing to a substantial uptrend in the EUR/USD. Fundamentally, we find support of 1.29120 with additional supports resting at 1.2881, 1.2857, and 1.2834. To the topside, see resistance at 1.2965 with additional resistances hanging at 1.2996, 1.3022, and 1.3058. The EUR/USD is currently exchanging at 1.2923.
GBP/USD
The Cable also followed U.S. equities higher, propelling from our 1st tier downtrend line and back above the psychological 1.40 area. However, the GBP/USD is backing away from our 2nd tier downtrend line as we speak, showing hesitation as investors await the S&P’s next move. The Cable has climbed back into the bottom of the February trading range, a positive development for the currency pair. We anticipate some consolidation from the GBP/USD today with no economic data releases from Britain. Additionally, we anticipate a near-term struggle with 1.40 and our 2nd tier downtrend line. All eyes will be on the consumer sentiment release from the U.S. today coupled with the conclusion of the G20 meeting. Fundamentally, we find resistances of 1.4062, 1.4112, 1.4155, and 1.4199. To the downside, we see supports of 1.4008, 1.3975, 1.3932 and 1.3903. The GBP/USD is currently exchanging at 1.4033.
USD/JPY
As anticipated, the USD/JPY continued its consolidation as investors contemplate a retest of the highly psychological 100 level. The movement of the USD/JPY will likely depend on whether U.S. equities can prove this is more than a bear market rally. Meanwhile, our 3rd tier downtrend line is creeping towards present price, so the USD/JPY will have to make up its mind soon. The near-term trend of the USD/JPY hangs in the balance, and we would not be surprised to see the currency pair wake from its slumber either today or the beginning of next week. Fundamentally, we find resistance of 99.05 with additional resistances hanging at 99.96, 100.69, and 101.53. To the downside, our 98.25 resistance turns support while we maintain our additional supports of 97.66, 97.22, and 96.59. The USD/JPY is currently exchanging at 98.26.
Crude Oil
Crude posted huge gains on moderate volume Thursday as U.S. equities experienced another large movement upwards. As predicted, Wednesday’s selloff in reaction to higher inventory levels was overdone, and the shorts paid for it yesterday. Investors are gearing up for Sunday when OPEC will meet with another production cut in the works. Crude futures leapt above our two uptrend lines and our 1st tier downtrend line. However, our 2nd tier downtrend line is presently weighing down on the futures. Even if the crude futures can put together another solid rally today, they still face the psychological $50/bbl level, and it wouldn’t be surprising to see the futures selloff on the news of OPEC cuts. We cannot forget there is still a massive downtrend at work, and crude futures will ultimately need stabilization on the demand side for price to truly bottom. The U.S. will release consumer sentiment data today which should have a considerable impact on equities and crude futures since consumption has fallen off a cliff during the crisis. Meanwhile, if crude futures can pop above March highs we could see large near-term gains. Fundamentally, we find supports of $46.24/bbl, $45.24/bbl, $44.89/bbl, and $44.29/bbl. The $45/bbl area becomes a psychological cushion with $50/bbl serving as a key psychological barrier. To the topside, we see resistances of $47.09/bbl, $47.26/bbl, $48.36/bbl, and $49.14/bbl. Crude futures are currently trading at $46.66/bbl.
Gold
Gold leveled off on Thursday as surging U.S. equities tempered the recent bull-run in the precious metal. While Gold sits above our 1st and 2nd tier uptrend lines, the 3rd is still an arm’s length away. Gold seems to be at a critical point concerning its near-term trend. If the precious metal can’t fight above March highs, then Gold could very easily dip back into its downtrend while equities continue their impressive rally. On the flip-side, if the precious metal can climb above March highs, we expect large near-term gains and a continuation of the up-trend. Gold has the psychological $900/oz level to defend itself from any exacerbated sell-offs for the time being. Fundamentally, we hold our resistances of $928.57/oz and $932.04/oz, with fresh resistances hanging at $932.42/oz and $943.97/oz. To the downside, our $922.92/oz and $919.01/oz resistances turn support while we maintain our additional supports of $913.80/oz. and $909.89/oz.. Gold is currently trading at $922.50/oz.
S&P
The S&P futures posted another impressive rally on Thursday, following through on Tuesday’s furious bull-run. The large movement upwards came in reaction to Citi and BofA reiterating they are presently sound financially, and will not need to be nationalized to stay afloat. Additionally, Obama gave what can be considered a ‘business-friendly’ speech, emphasizing the need for reform while keeping the entrepreneurial spirit intact. Finally, retail sales showed an improvement, declining only 0.1% versus estimates of a 0.5% decline. Investors ignored another discouraging unemployment claims release, which we view as a more relevant indicator of the economy’s health. Germany continued its week of alarmingly negative data, showing industrial production decreased by 7.5%, nearly 130% worse than analyst expectations. Therefore, we can attribute Thursday’s gains in the S&P futures to little more than psychological assurances from Obama and the major banks. Though the sign of leadership was sorely needed, we have seen little concrete evidence to alter our negative outlook on the S&P futures trend wise. While we expected a follow-through from Tuesday’s gigantic gains, investors will need substantial evidence to fully commit to an economic recovery in the U.S. Unemployment and foreclosures are still rising and global production is in a freefall. The U.S. will release heavily-weighted consumer sentiment data today and Treasury Secretary Geithner will address the G20 conference. The S&P futures still face our 3rd tier uptrend line, and we can easily plot a 4th tier on our chart of the situation calls for it. Hence, U.S. equities still have much to prove to continue their ascent to 800. Fundamentally, we find resistance of 760.75 with additional resistances hanging at 771.5, 778.75, and 785.5. To the downside, we see support of 750 with additional supports sitting at 740.5, 732.75, and 722. The S&P futures are currently trading at 757.75.
30 Year
The 30 Year T-Bond futures experienced profit taking on Thursday, ducking back below our 2nd tier downtrend line as U.S. equities flourished. Despite the decline, the 30 Year futures remain above our uptrend line, and will likely wait to make a serious directional decision when our 2nd tier downtrend and uptrend lines reach their upcoming inflection point. Meanwhile, the futures remain wedged between the trading zone built since February. However, once the 30 Year futures do make a directional decision, expect large and sudden movements. China is filling the news wire expressing concern over the safety of U.S. Treasuries. These statements are exacerbating worries of demand drying up, raising interest payments and lowering price. Hence, we see the 30 Year futures on the decline in the near-term. Fundamentally, we see resistance of 127.91 with 2nd tier and top-end hanging at 128.562 and 129.172, respectively. To the downside, we find supports of 127.422, 127.016, 126.641, and 126.078. The 30 Year Treasury Bond futures are currently trading at 127 13.5.
