EUR/USD
The EUR/USD consolidated late Thursday and is experiencing some profit taking on Friday after the massive run in reaction to America’s announcement of quantitative easing. We view the present downward movement in the EUR/USD as healthy profit-taking considering the large gains logged in the prior 48 hours. As we stated in our previous post, Wednesday’s jump in the EUR/USD was a tectonic shift in trend and traders should keep this point in mind. While there are a few more downtrend moving averages lying in the distant future, the near-term has a clear runway to the upside unless the currency pair should drop below our downtrend line. If the EUR/USD can clear 1/8/09 highs and our 2nd tier uptrend line we expect a near-term rally towards our 3rd tier uptrend line. Therefore, while the medium-term has some landmines, the near-term outlook for the EUR/USD is rosy. The EU released Industrial Production and German PPI this morning, each showing a relative recovery with a possible reversal in trend. However, we cannot forget the horrible manufacturing and production data Germany released last week, and we will have to wait and see if this seeps into higher unemployment and lower consumer sentiment. The U.S. will not release any heavily-weighted economic data today and the EU will take a breather until a busy Tuesday of next week. Fundamentally, we see supports of 1.3554, 1.3494, 1.3427, and 1.3371. To the topside, find resistances of 1.3624, 1.3688, 1.3724, 1.3800, and 1.3848. The 1.35 area becomes a psychological cushion with 1.40 serving as a highly psychological barrier. The EUR/USD is currently exchanging at 1.3605.
GBP/USD
The Cable is consolidating along with the EUR/USD as investors cash in some profits after Wednesday’s furious rally. Despite the slight pullback, the Cable is now comfortably above the downtrend line which we view as the last line of moving average resistance preventing the currency pair from continuing its uptrend. Therefore, despite the immediate obstacles presented by February highs, Wednesday’s move should mark the end of the downtrend for now. As we’ve seen in the past, large sudden movements are normally followed by successive aftershocks and a perpetuation of the movement’s momentum. However, keeping this in mind, the GBP/USD could still experience some near-term profit-taking and has dropped below our near-term trend line. Furthermore, as we mentioned before, February highs and the psychological 1.50 barrier wait in the distance. Britain is taking the day off from economic data. Fundamentally, we maintain our resistances of 1.4424, 1.4505, 1.4554, and 1.4617. The 1.45 area will serve as a psychological barrier for the time being. To the downside, we hold our supports of 1.4370, 1.4310, 1.4255 and 1.4196. The GBP/USD is currently exchanging at 1.4417.
USD/JPY
The USD/JPY is recovering from its earlier losses and has climbed back above the psychological 95 level and our 1st tier downtrend line. Furthermore, the currency pair is fighting above our near-term trend line showing investors are hesitating to capitulate. Despite the recent stability, the medium-term downtrend is back in control after the USD/JPY decided to head south out of the February trading range. The quantitative easing actions of Japan and the U.S. are now competing against each other in terms of severity vs. GDP. Investors are showing the quant. easing of the U.S. overcomes that of Japan for the time being. However, to give bulls some sense of comfort, the USD/JPY still has January highs and 2008 lows to fall back on. Regardless, our outlook on the USD/JPY is negative until the currency pair makes a fundamental move upwards, countering the one made on Wednesday. Fundamentally, we find resistances of 95.92, 96.65, 97.49, and 98.11. To the downside, we see supports of 95.08, 94.57, 93.73, and 93.06. The USD/JPY is currently exchanging at 95.18.
Crude Oil
Crude is consolidating along with gold and all major Dollar crosses. In another sign of encouragement to the upside, crude futures are sticking above the highly psychological level during the consolidation process. The futures are presently struggling with our 2nd tier downtrend line, the legitimate fundamental barrier before a retest of 2009 highs. Investors continue to ignore the rising crude inventories and are encouraged by the fact that a weaker Dollar should stimulate global demand for the Dollar-pegged commodity. Furthermore, even though recent production and manufacturing data points from the U.S. have been negative, they indicate stabilization with a possible upturn. Quantitative easing is already lowering interest rates on mortgages and we should expect the same for automobile loans, possibly resulting in higher automobile sales and consequently higher consumption of crude. Lastly, the OPEC cuts made this year were large and they are intact, so supply is still choked off. Hence, crude futures continue their run to the upside. Even though the indicators are pointing towards more near-term gains, we are uncertain whether the futures can head past January highs and we will have to analyze this in the futures should the situation present itself. Fundamentally, we hold our supports of $50.98/bbl, $50.53/bbl, $50.03/bbl, and $49.49/bbl. The $50/bbl becomes a psychological cushion. To the topside, we maintain our resistances of $51.56/bbl, $52.09/bbl, $52.53/bbl, and $53.18/bbl. Crude futures are currently trading at $51.58/bbl.
Gold
Gold is consolidating along with the major Dollar crosses as investors continue to decipher Wednesday’s monumental rally. As we explained previously, Gold made a clear statement to the upside and Wednesday’s move should carry over for the near-term. Most interesting is whether gold will exhibit a positive correlation with U.S. equities. With gold in an uptrend and all equity correlations pointing to the upside, we will have to see whether equities can rally past the critical 800 level. That being said, gold is presently trading just below our 2nd tier uptrend line with a 3rd tier hanging in the distance. We placed a new near-term downtrend line on our chart to exemplify the near-term obstacles the precious metal must overcome before catapulting towards a retest of the highly psychological $1000/oz mark. Therefore, gold might continue to consolidate for the time being as it struggles with the psychological $950/oz area. Fundamentally we see resistances of $951.43/oz, $955.34/oz, $959.90/oz, and $962.51/oz. To the downside, find supports of $948.17/oz, $945.88/oz, $942.62/oz, and $940.67/oz. Gold is currently trading at $950.15/oz.
S&P
Even though all of the equity correlations are indicating a furious rally in the S&P futures, investors are debating whether to send the index past the highly psychological 800 level. Investors are still digesting Wednesday’s huge move from the Federal Reserve, and are uncertain whether it spells recovery or pending disaster for the U.S. economy. Financials are trading down for the most part while technologies rally. The largest concern for investors is that the quantitative easing will result in hyperinflation, or higher prices coupled with a withering economy. The Dollar has weakened significantly across the board while commodities such as gold, grains, and crude are rising. Meanwhile, the U.S. reported stabilizing PPI and CPIs this week, showing inflation could be coming. Now, the question becomes whether a depreciated Dollar can stimulate demand from Europe, Britain, Japan and China to ignite U.S. manufacturing and production. U.S. equities are showing concern over the latter, so the near-term path of the S&P futures is in limbo. While we are tempted to be optimistic on the uptrend for the futures, once cannot be certain at this point until the S&P commits to an 800+ reality. The U.S. will not release any economic data today. However, all ears will be on Fed Chairman Bernanke as he addresses the public today. Investors seek further clarity in the quantitative easing action and could rally if Bernanke provides it. Fundamentally, we find resistance of 789.25 with additional resistances hanging at 794.5, 804, 812.75, 818.75, and 829. To the downside, we see supports of 782.5, 775, 765.25, and 758.25. The S&P futures are currently trading at 788.
30 Year
The 30 Year T-Bond futures are leveling off following Wednesday’s fundamental gains in reaction to the Fed’s decision to implement quantitative easing. The profit-taking is reflected across the 5 and 10 Year Notes as well. However, such a large move should have its ramifications, and we would not be surprised to see the U.S. Treasuries continue on their upward path for the near-term. However, the question becomes whether the 30 Year futures can climb past the drudges of the January trading range to get back to making comfortable gains. Otherwise, there is always the possibility of the downtrend taking hold again if China’s taste for U.S. debt should sour and quantitative easing prove unsubstantial to cover the necessary liquidity to fund the government’s economic stimulus measures. These are interesting times to say the least, and we will have to wait and see how the situation plays out. Fundamentally, we see resistance of 132.39 with additional resistances hanging at 132.98 and 133.36. To the downside, we find supports of 131.34, 130.95, 130.53, and 130.11. The 30 Year Treasury Bond futures are currently trading at 131 17.5.
The EUR/USD consolidated late Thursday and is experiencing some profit taking on Friday after the massive run in reaction to America’s announcement of quantitative easing. We view the present downward movement in the EUR/USD as healthy profit-taking considering the large gains logged in the prior 48 hours. As we stated in our previous post, Wednesday’s jump in the EUR/USD was a tectonic shift in trend and traders should keep this point in mind. While there are a few more downtrend moving averages lying in the distant future, the near-term has a clear runway to the upside unless the currency pair should drop below our downtrend line. If the EUR/USD can clear 1/8/09 highs and our 2nd tier uptrend line we expect a near-term rally towards our 3rd tier uptrend line. Therefore, while the medium-term has some landmines, the near-term outlook for the EUR/USD is rosy. The EU released Industrial Production and German PPI this morning, each showing a relative recovery with a possible reversal in trend. However, we cannot forget the horrible manufacturing and production data Germany released last week, and we will have to wait and see if this seeps into higher unemployment and lower consumer sentiment. The U.S. will not release any heavily-weighted economic data today and the EU will take a breather until a busy Tuesday of next week. Fundamentally, we see supports of 1.3554, 1.3494, 1.3427, and 1.3371. To the topside, find resistances of 1.3624, 1.3688, 1.3724, 1.3800, and 1.3848. The 1.35 area becomes a psychological cushion with 1.40 serving as a highly psychological barrier. The EUR/USD is currently exchanging at 1.3605.
GBP/USD
The Cable is consolidating along with the EUR/USD as investors cash in some profits after Wednesday’s furious rally. Despite the slight pullback, the Cable is now comfortably above the downtrend line which we view as the last line of moving average resistance preventing the currency pair from continuing its uptrend. Therefore, despite the immediate obstacles presented by February highs, Wednesday’s move should mark the end of the downtrend for now. As we’ve seen in the past, large sudden movements are normally followed by successive aftershocks and a perpetuation of the movement’s momentum. However, keeping this in mind, the GBP/USD could still experience some near-term profit-taking and has dropped below our near-term trend line. Furthermore, as we mentioned before, February highs and the psychological 1.50 barrier wait in the distance. Britain is taking the day off from economic data. Fundamentally, we maintain our resistances of 1.4424, 1.4505, 1.4554, and 1.4617. The 1.45 area will serve as a psychological barrier for the time being. To the downside, we hold our supports of 1.4370, 1.4310, 1.4255 and 1.4196. The GBP/USD is currently exchanging at 1.4417.
USD/JPY
The USD/JPY is recovering from its earlier losses and has climbed back above the psychological 95 level and our 1st tier downtrend line. Furthermore, the currency pair is fighting above our near-term trend line showing investors are hesitating to capitulate. Despite the recent stability, the medium-term downtrend is back in control after the USD/JPY decided to head south out of the February trading range. The quantitative easing actions of Japan and the U.S. are now competing against each other in terms of severity vs. GDP. Investors are showing the quant. easing of the U.S. overcomes that of Japan for the time being. However, to give bulls some sense of comfort, the USD/JPY still has January highs and 2008 lows to fall back on. Regardless, our outlook on the USD/JPY is negative until the currency pair makes a fundamental move upwards, countering the one made on Wednesday. Fundamentally, we find resistances of 95.92, 96.65, 97.49, and 98.11. To the downside, we see supports of 95.08, 94.57, 93.73, and 93.06. The USD/JPY is currently exchanging at 95.18.
Crude Oil
Crude is consolidating along with gold and all major Dollar crosses. In another sign of encouragement to the upside, crude futures are sticking above the highly psychological level during the consolidation process. The futures are presently struggling with our 2nd tier downtrend line, the legitimate fundamental barrier before a retest of 2009 highs. Investors continue to ignore the rising crude inventories and are encouraged by the fact that a weaker Dollar should stimulate global demand for the Dollar-pegged commodity. Furthermore, even though recent production and manufacturing data points from the U.S. have been negative, they indicate stabilization with a possible upturn. Quantitative easing is already lowering interest rates on mortgages and we should expect the same for automobile loans, possibly resulting in higher automobile sales and consequently higher consumption of crude. Lastly, the OPEC cuts made this year were large and they are intact, so supply is still choked off. Hence, crude futures continue their run to the upside. Even though the indicators are pointing towards more near-term gains, we are uncertain whether the futures can head past January highs and we will have to analyze this in the futures should the situation present itself. Fundamentally, we hold our supports of $50.98/bbl, $50.53/bbl, $50.03/bbl, and $49.49/bbl. The $50/bbl becomes a psychological cushion. To the topside, we maintain our resistances of $51.56/bbl, $52.09/bbl, $52.53/bbl, and $53.18/bbl. Crude futures are currently trading at $51.58/bbl.
Gold
Gold is consolidating along with the major Dollar crosses as investors continue to decipher Wednesday’s monumental rally. As we explained previously, Gold made a clear statement to the upside and Wednesday’s move should carry over for the near-term. Most interesting is whether gold will exhibit a positive correlation with U.S. equities. With gold in an uptrend and all equity correlations pointing to the upside, we will have to see whether equities can rally past the critical 800 level. That being said, gold is presently trading just below our 2nd tier uptrend line with a 3rd tier hanging in the distance. We placed a new near-term downtrend line on our chart to exemplify the near-term obstacles the precious metal must overcome before catapulting towards a retest of the highly psychological $1000/oz mark. Therefore, gold might continue to consolidate for the time being as it struggles with the psychological $950/oz area. Fundamentally we see resistances of $951.43/oz, $955.34/oz, $959.90/oz, and $962.51/oz. To the downside, find supports of $948.17/oz, $945.88/oz, $942.62/oz, and $940.67/oz. Gold is currently trading at $950.15/oz.
S&P
Even though all of the equity correlations are indicating a furious rally in the S&P futures, investors are debating whether to send the index past the highly psychological 800 level. Investors are still digesting Wednesday’s huge move from the Federal Reserve, and are uncertain whether it spells recovery or pending disaster for the U.S. economy. Financials are trading down for the most part while technologies rally. The largest concern for investors is that the quantitative easing will result in hyperinflation, or higher prices coupled with a withering economy. The Dollar has weakened significantly across the board while commodities such as gold, grains, and crude are rising. Meanwhile, the U.S. reported stabilizing PPI and CPIs this week, showing inflation could be coming. Now, the question becomes whether a depreciated Dollar can stimulate demand from Europe, Britain, Japan and China to ignite U.S. manufacturing and production. U.S. equities are showing concern over the latter, so the near-term path of the S&P futures is in limbo. While we are tempted to be optimistic on the uptrend for the futures, once cannot be certain at this point until the S&P commits to an 800+ reality. The U.S. will not release any economic data today. However, all ears will be on Fed Chairman Bernanke as he addresses the public today. Investors seek further clarity in the quantitative easing action and could rally if Bernanke provides it. Fundamentally, we find resistance of 789.25 with additional resistances hanging at 794.5, 804, 812.75, 818.75, and 829. To the downside, we see supports of 782.5, 775, 765.25, and 758.25. The S&P futures are currently trading at 788.
30 Year
The 30 Year T-Bond futures are leveling off following Wednesday’s fundamental gains in reaction to the Fed’s decision to implement quantitative easing. The profit-taking is reflected across the 5 and 10 Year Notes as well. However, such a large move should have its ramifications, and we would not be surprised to see the U.S. Treasuries continue on their upward path for the near-term. However, the question becomes whether the 30 Year futures can climb past the drudges of the January trading range to get back to making comfortable gains. Otherwise, there is always the possibility of the downtrend taking hold again if China’s taste for U.S. debt should sour and quantitative easing prove unsubstantial to cover the necessary liquidity to fund the government’s economic stimulus measures. These are interesting times to say the least, and we will have to wait and see how the situation plays out. Fundamentally, we see resistance of 132.39 with additional resistances hanging at 132.98 and 133.36. To the downside, we find supports of 131.34, 130.95, 130.53, and 130.11. The 30 Year Treasury Bond futures are currently trading at 131 17.5.
