EUR/USD
The EUR/USD is flying after the EU reported a Core CPI one basis point better than expectations. A stabilizing CPI indicates future growth in business revenue and consequently a stronger Euro. Consequently, if additional EU data confirms this trend then the ECB may be able to avoid lowering its benchmark rate further. However, we must not forget the ugly economic data released from Germany last week, which raises a cautionary flag to the wind. ECB President Trichet addresses the public today, and all ears will be keen to decipher his language concerning upcoming monetary policy decisions. Meanwhile, the EUR/USD is putting on an impressive show, pushing through our 2nd and 3rd uptrend lines in a single swoop. The currency pair is currently sitting above the psychological 1.30 level and could experience some near-term profit taking as investors hesitate to send the EUR/USD above and beyond. Furthermore, the currency pair is facing February highs, a constrictive barrier for the time being. Nevertheless, the EUR/USD continues to build considerable momentum and has significantly increased the possibility of a large near-term breakout. Fundamentally, we find support of 1.3022 with additional supports resting at 1.2991, 1.2971, and 1.2934. To the topside, see resistance at 1.3058 with additional resistances hanging at 1.3086, 1.3113, and 1.3146. The EUR/USD is currently exchanging at 1.3035.
GBP/USD
The Cable is strengthening Monday after Barclay’s said its operations continue to outperform. The UK bank’s shares soared 22% during the European trading session. Additionally, the Cable is finding encouragement in the EU’s stable CPI report coupled with its positive correlation with U.S. equities. The S&P futures are pointing towards another positive open for the U.S. equity markets. However, the GBP/USD is experiencing some profit-taking right now as it encounters March highs and the dense trading range dating back to late January. We won’t see any economic data from Britain until Wednesday. Therefore, the Cable will likely rely on its positive correlation with the EUR/USD and U.S. equities for the next two days. Fundamentally, we find resistances of 1.4199, 1.4264, 1.4307, and 1.4354. To the downside, we see supports of 1.4156, 1.4112, 1.4047 and 1.4008. The GBP/USD is currently exchanging at 1.4188.
USD/JPY
The USD/JPY continues its movement sideways, building up a solid base in the meantime. Investors are still contemplating whether to catapult the currency pair above 100, which would signify a psychologically important move for the Dollar. Seeing as U.S. equities continue to strengthen as the Japanese economy weakens, there are growing incentives to follow through with the fundamental move. However, investors will still wait for a statement move from the S&P futures showing the present rally has legs. If the S&P futures can plow through key resistances, the USD/JPY should follow suit. Fundamentally, we maintain our resistance of 99.05 with additional resistances hanging at 99.96, 100.69, and 101.53. To the downside, we hold our 98.25 support with additional supports sitting at 97.66, 97.22, and 96.59. The USD/JPY is currently exchanging at 98.44.
Crude Oil
Crude futures have sold off sharply after OPEC decided to keep production levels unchanged. Investors were anticipating another supply shock, so the price of crude is paying for the inaction on Monday. Obama put in a call to the Saudis a week ago, imploring OPEC’s most influential country to keep production stable to avoid strangling a limping global economy. The Saudis took notice, and production should remain unchanged until they next meeting in May. The futures are currently finding stability along our uptrend lines, showing there is hope for the uptrend. Nevertheless, the rally has surely been dented with crude futures trading back below the psychological $45/bbl level. The stability of the price of crude will now depend on the U.S. economy and the demand side of the equation, so expect a strong correlation with the S&P futures for the near-term. Fundamentally, we find supports of $43.60/bbl, $42.94bbl, $42.56/bbl, and $42.12/bbl. The $40/bbl area becomes a psychological cushion with $45/bbl serving as a key psychological barrier. To the topside, we see resistances of $44.59/bbl, $44.94/bbl, $45.66/bbl, and $46.29/bbl. Crude futures are currently trading at $43.99/bbl.
Gold
Gold is stabilizing and recovering from its slight downward movement on Friday despite equities edging up in pre-market. The main test for the precious metal will be March highs and our 3rd tier uptrend line. If Gold can’t rise above these levels soon, then the downtrend could take hold again. If the precious metal can close comfortably above March highs, we anticipate large near-term gains. It will be interesting to see how Gold’s negative correlation with equities plays out in the coming week. The stabilization and hesitation of Gold to break downwards could be hinting at an upcoming selloff in the S&P futures. However, the precious metal hasn’t committed to a near-term direction yet, so we will stick with a wait and see approach. Fundamentally, we hold our resistances of $928.57/oz, $932.04/oz, $932.42/oz, and $943.97/oz. To the downside, we maintain our supports of $922.92/oz, $919.01/oz, 913.80/oz. and $909.89/oz. Gold is currently trading at $928.00/oz.
S&P
The S&P futures bounced around on Friday to end the session with slight gains after the U.S. reported slightly better than expected Trade Balance and Consumer Sentiment data. Even though the numbers beat expectations, the data is still dismal and indicates heavy economic contraction. The U.S. will release some more significant monthly data this week, highlighted by Building Permits and PPI on Tuesday followed by CPI on Wednesday. Investors are becoming increasingly concerned about the level of prices in the U.S. economy. A worst case scenario would show excessive growth of producer prices coupled with dropping consumer prices, raising cost and lowering revenue. Equities are looking to open higher again Monday with the S&P futures trading in the green pre-market. While many investors are amped over the extraordinary gains posted last week, we still see key fundamental obstacles in the near-term. Do not forget last week’s rally was ignited by psychological diction emitted by financial CEO’s and Obama with little positive concrete data to back up the claims. In fact, Germany released some appalling economic data while Japanese and Chinese production figures left little to be desired. The futures are gradually approaching February highs, our 3rd tier downtrend line, and the psychological 800 level all at once. Hence, the decision of whether turn this rally into something substantial is approaching this week. The U.S. may pull another psychological weapon off of the gun rack this week by releasing a plan to tackle the toxic debt on bank balance sheets. The equity correlations are painting a distorted picture. Crude is moving lower following OPEC’s decision to keep output unchanged while gold is behaving in an ambivalent manner. The 30 Year T-Bond futures are trading lower following China’s lack of conviction concerning the attractiveness of U.S. debt. Therefore, the equity correlations provide a mixed outlook. Fundamentally, we find resistance of 760.75 with additional resistances hanging at 771.5, 778.75, and 793.5. To the downside, we see support of 760.75 with additional supports sitting at750, 740.5, and 732.75. The S&P futures are currently trading at 764.50.
30 Year
The 30 Year T-Bond futures are experiencing profit-taking Monday with a trend line inflection point approaching today. Therefore, we should witness some heightened volatility to kick off the weekend. The 30 Year futures are weakening in reaction to the realization China is slowly diversifying its foreign exchange reserves in an effort to reduce exposure to U.S. debt. As a result, price is declining and interest rates rising in an effort to attract more investors to the escalating level of U.S. bond issuance. Nevertheless, the 30 Year futures remain wedged between the trading range from early February. The futures should continue to do so until either February highs or lows are breached. However, when one of these levels breaks, expect very high near-term volatility. Fundamentally, we see resistance of 127.01 additional resistances of 127.42, 127.91, and 128.56. To the downside, we find support of 126.64 with 2nd tier and bottom-end sitting at 126.08 and 125.34. The 30 Year Treasury Bond futures are currently trading at 126 26.5.
The EUR/USD is flying after the EU reported a Core CPI one basis point better than expectations. A stabilizing CPI indicates future growth in business revenue and consequently a stronger Euro. Consequently, if additional EU data confirms this trend then the ECB may be able to avoid lowering its benchmark rate further. However, we must not forget the ugly economic data released from Germany last week, which raises a cautionary flag to the wind. ECB President Trichet addresses the public today, and all ears will be keen to decipher his language concerning upcoming monetary policy decisions. Meanwhile, the EUR/USD is putting on an impressive show, pushing through our 2nd and 3rd uptrend lines in a single swoop. The currency pair is currently sitting above the psychological 1.30 level and could experience some near-term profit taking as investors hesitate to send the EUR/USD above and beyond. Furthermore, the currency pair is facing February highs, a constrictive barrier for the time being. Nevertheless, the EUR/USD continues to build considerable momentum and has significantly increased the possibility of a large near-term breakout. Fundamentally, we find support of 1.3022 with additional supports resting at 1.2991, 1.2971, and 1.2934. To the topside, see resistance at 1.3058 with additional resistances hanging at 1.3086, 1.3113, and 1.3146. The EUR/USD is currently exchanging at 1.3035.
GBP/USD
The Cable is strengthening Monday after Barclay’s said its operations continue to outperform. The UK bank’s shares soared 22% during the European trading session. Additionally, the Cable is finding encouragement in the EU’s stable CPI report coupled with its positive correlation with U.S. equities. The S&P futures are pointing towards another positive open for the U.S. equity markets. However, the GBP/USD is experiencing some profit-taking right now as it encounters March highs and the dense trading range dating back to late January. We won’t see any economic data from Britain until Wednesday. Therefore, the Cable will likely rely on its positive correlation with the EUR/USD and U.S. equities for the next two days. Fundamentally, we find resistances of 1.4199, 1.4264, 1.4307, and 1.4354. To the downside, we see supports of 1.4156, 1.4112, 1.4047 and 1.4008. The GBP/USD is currently exchanging at 1.4188.
USD/JPY
The USD/JPY continues its movement sideways, building up a solid base in the meantime. Investors are still contemplating whether to catapult the currency pair above 100, which would signify a psychologically important move for the Dollar. Seeing as U.S. equities continue to strengthen as the Japanese economy weakens, there are growing incentives to follow through with the fundamental move. However, investors will still wait for a statement move from the S&P futures showing the present rally has legs. If the S&P futures can plow through key resistances, the USD/JPY should follow suit. Fundamentally, we maintain our resistance of 99.05 with additional resistances hanging at 99.96, 100.69, and 101.53. To the downside, we hold our 98.25 support with additional supports sitting at 97.66, 97.22, and 96.59. The USD/JPY is currently exchanging at 98.44.
Crude Oil
Crude futures have sold off sharply after OPEC decided to keep production levels unchanged. Investors were anticipating another supply shock, so the price of crude is paying for the inaction on Monday. Obama put in a call to the Saudis a week ago, imploring OPEC’s most influential country to keep production stable to avoid strangling a limping global economy. The Saudis took notice, and production should remain unchanged until they next meeting in May. The futures are currently finding stability along our uptrend lines, showing there is hope for the uptrend. Nevertheless, the rally has surely been dented with crude futures trading back below the psychological $45/bbl level. The stability of the price of crude will now depend on the U.S. economy and the demand side of the equation, so expect a strong correlation with the S&P futures for the near-term. Fundamentally, we find supports of $43.60/bbl, $42.94bbl, $42.56/bbl, and $42.12/bbl. The $40/bbl area becomes a psychological cushion with $45/bbl serving as a key psychological barrier. To the topside, we see resistances of $44.59/bbl, $44.94/bbl, $45.66/bbl, and $46.29/bbl. Crude futures are currently trading at $43.99/bbl.
Gold
Gold is stabilizing and recovering from its slight downward movement on Friday despite equities edging up in pre-market. The main test for the precious metal will be March highs and our 3rd tier uptrend line. If Gold can’t rise above these levels soon, then the downtrend could take hold again. If the precious metal can close comfortably above March highs, we anticipate large near-term gains. It will be interesting to see how Gold’s negative correlation with equities plays out in the coming week. The stabilization and hesitation of Gold to break downwards could be hinting at an upcoming selloff in the S&P futures. However, the precious metal hasn’t committed to a near-term direction yet, so we will stick with a wait and see approach. Fundamentally, we hold our resistances of $928.57/oz, $932.04/oz, $932.42/oz, and $943.97/oz. To the downside, we maintain our supports of $922.92/oz, $919.01/oz, 913.80/oz. and $909.89/oz. Gold is currently trading at $928.00/oz.
S&P
The S&P futures bounced around on Friday to end the session with slight gains after the U.S. reported slightly better than expected Trade Balance and Consumer Sentiment data. Even though the numbers beat expectations, the data is still dismal and indicates heavy economic contraction. The U.S. will release some more significant monthly data this week, highlighted by Building Permits and PPI on Tuesday followed by CPI on Wednesday. Investors are becoming increasingly concerned about the level of prices in the U.S. economy. A worst case scenario would show excessive growth of producer prices coupled with dropping consumer prices, raising cost and lowering revenue. Equities are looking to open higher again Monday with the S&P futures trading in the green pre-market. While many investors are amped over the extraordinary gains posted last week, we still see key fundamental obstacles in the near-term. Do not forget last week’s rally was ignited by psychological diction emitted by financial CEO’s and Obama with little positive concrete data to back up the claims. In fact, Germany released some appalling economic data while Japanese and Chinese production figures left little to be desired. The futures are gradually approaching February highs, our 3rd tier downtrend line, and the psychological 800 level all at once. Hence, the decision of whether turn this rally into something substantial is approaching this week. The U.S. may pull another psychological weapon off of the gun rack this week by releasing a plan to tackle the toxic debt on bank balance sheets. The equity correlations are painting a distorted picture. Crude is moving lower following OPEC’s decision to keep output unchanged while gold is behaving in an ambivalent manner. The 30 Year T-Bond futures are trading lower following China’s lack of conviction concerning the attractiveness of U.S. debt. Therefore, the equity correlations provide a mixed outlook. Fundamentally, we find resistance of 760.75 with additional resistances hanging at 771.5, 778.75, and 793.5. To the downside, we see support of 760.75 with additional supports sitting at750, 740.5, and 732.75. The S&P futures are currently trading at 764.50.
30 Year
The 30 Year T-Bond futures are experiencing profit-taking Monday with a trend line inflection point approaching today. Therefore, we should witness some heightened volatility to kick off the weekend. The 30 Year futures are weakening in reaction to the realization China is slowly diversifying its foreign exchange reserves in an effort to reduce exposure to U.S. debt. As a result, price is declining and interest rates rising in an effort to attract more investors to the escalating level of U.S. bond issuance. Nevertheless, the 30 Year futures remain wedged between the trading range from early February. The futures should continue to do so until either February highs or lows are breached. However, when one of these levels breaks, expect very high near-term volatility. Fundamentally, we see resistance of 127.01 additional resistances of 127.42, 127.91, and 128.56. To the downside, we find support of 126.64 with 2nd tier and bottom-end sitting at 126.08 and 125.34. The 30 Year Treasury Bond futures are currently trading at 126 26.5.
