EUR/USD
The EUR/USD has recovered well from Monday’s lows despite a lower than expected CPI Flash Estimate. The large movement upwards is a bit confusing considering declining prices imply the ECB may need to get more aggressive with its monetary policy at Thursday’s meeting. Analysts are expecting the ECB to lower its benchmark rate to 1% and the use of quantitative easing is on the table. Monetary easing is normally negative for a currency, hence why the surge taking place this morning is a bit out of place. As a result, we view the appreciation of the Euro against the Dollar over the last 24 hours as buyers taking advantage of oversold conditions. On an encouraging note, for those long the EUR/USD the currency pair didn’t even come close to the psychological 1.30 level and our 1st tier uptrend line. Therefore, the short-term uptrend is still in play. The defining point for the uptrend will be whether the EUR/USD can brave above our 2nd tier uptrend and medium-term downtrend lines. The U.S. will release the Chicago PMI and CB Consumer Confidence data today. However, all eyes will be on U.S. equities to see if the S&P futures can recover from yesterday’s large selloff. We anticipate the positive correlation between the EUR/USD and S&P futures to continue until Thursday’s ECB meeting. Fundamentally, we find supports of 1.3291, 1.3253, 1.3205, 1.3162, and 1.3124. To the topside, we see resistances of 1.3334, 1.3366, 1.3409, and 1.3446. The 1.35 area serves as a psychological barrier with 1.30 acting as a heavily-weighted psychological cushion. The EUR/USD is currently exchanging at 1.3308.
GBP/USD
The Pound appreciated against the Dollar after GfK Consumer Confidence came in above analyst expectations and British retailing giant Marks and Spencer reported an improvement in earnings. The GBP/USD proceeded to experience considerable strength from our medium-term downtrend line, and is fighting towards our 2nd tier uptrend line as we type. The bounce in the Cable is encouraging considering it happened comfortably above our 1st tier uptrend line. However, the rally is fueled mostly by oversold conditions since we don’t view the above-mentioned news as game-changing. Additionally, the up-bars and supported by insufficient volume. U.S. financials are still in serious trouble, applying downward pressure on equities. Considering the financial industry comprises nearly 25% of Britain’s GDP, another setback in U.S. financials would likely have negative repercussions for the British economy. Britain and America are coupled, and both central banks are implementing quantitative easing. Hence, it’s difficult to place one’s full weight behind an uptrend in the GBP/USD. Regardless, the near-term uptrend is beating out our medium-term downtrend for the time being. Therefore, we will have to see how the trend plays out with the much-anticipated G20 Summit approaching. As with the EUR/USD, we anticipate the GBP/USD staying true to its positive correlation with U.S. equities. Fundamentally, we find resistance of 1.4326 with additional resistances hanging at 1.4362, 1.4398, and 1.4437. The 1.45 area will serve as a psychological barrier with 1.40 acting as a highly psychological cushion. To the downside, we see supports of 1.4283, 1.4240, 1.4208, 1.4159, and 1.4100. The GBP/USD is currently exchanging at 1.4298.
USD/JPY
The USD/JPY continues its sideways battle as investors await the incoming Tankan Manufacturing Index. Japan released some mixed data earlier today, including worse than expected Unemployment and Average Cash Earnings numbers. On the flipside, Household Spending declined less than expected. Despite the encouraging Household Spending number, the data coming from Japan reiterates the same negative theme. Though new economic stimulus seems imminent, Aso and the BOJ aren’t budging as the G20 Summit approaches. The inactivity from the BOJ combined with discouraging economic data is sending the USD/JPY back towards the crest of February highs. However, it seems investors will wait for the Tankan Index before deciding whether to send the currency pair towards 100. The USD/JPY’s incessant battle with February highs indicates the significance of present levels. If the Tankan is much worse than expected, then we could see the USD/JPY launch out of its trading range towards new highs. However, don’t forget the downtrend is nearby. If the USD/JPY fails to retest 100 this time around, we could see the currency pair collapse back into its debilitating downtrend. Fundamentally, we see resistances of 99.06, 99.79, 100.28, 100.71, and 101.44. To the downside, we find supports of 98.16, 97.66, 96.65, and 95.98. The USD/JPY is currently exchanging at 98.54.
Crude Oil
Crude bounced off our 1st tier uptrend line beautifully yesterday after a massive selloff in reaction to the possible bankruptcy of GM and Chrysler. As we stated in our previous post, the failure of the major U.S. auto manufacturers takes a large bite out of demand from several sides. Higher unemployment implies a reduction in automobile purchases and consumption of crude. Additionally, we must consider the crude utilized to both manufacture and distribute the automobiles. With the S&P below 800 and global consumption and production levels coming into question again, there were sufficient reasons to send crude futures tumbling lower. Crude futures are trying to recover Tuesday morning but are struggling mightily with the psychological $50/bbl level. Despite the bounce taking place right now, the debilitating downtrend resurfaced in a hurry. While investors may stabilize crude futures a bit during today’s session, all eyes will be on Japan’s release of its Tankan Manufacturing Index tomorrow. The U.S. will follow with manufacturing and employment data of its own, not to mention the weekly crude oil inventory number. Therefore, the 1st tier uptrend line will sure be tested in the next 24-48 hours. If the uptrend can’t hold, then we could see another massive near-term selloff in both crude and the S&P futures. However, before we get ahead of ourselves, the uptrend is still intact and we’ll have to take a wait and see approach. Fundamentally, we find resistances of $49.49/bbl, $49.81/bbl, $50.41/bbl, and $50.79/bbl. To the downside, we see supports of $49.11/bbl, $48.51/bbl, $48.03/bbl, and $47.61/bbl. The crude futures are presently trading at $49.21/bbl.
Gold
Gold is bouncing up while exhibiting a positive correlation with the Euro and Pound. The precious metal managed to avoid a retest of $900/oz. and stabilized on our previous bottom-end of $908.66/oz. We’re noticing a clear theme in terms of correlation. Gold is opting for a positive correlation with the EUR/USD, GBP/USD and U.S. equities. Therefore, we encourage investors to analyze Gold’s correlations before executing a trade on the precious metal. Gold’s uptrend has been rescued once again with our last-resort 1st tier uptrend fading into the distance. However, the medium-term downtrend line is bearing down on price, and we may witness some sideways movement until the two reach an inflection point. Our downtrend line should prove to be a formidable challenge with the possibility of a triple-top approaching. Ultimately, the path of Gold will rely on the state of U.S. equities and the American economy. If the S&P can’t recover and equities head for another leg down, we could see Gold and commodities follow suit in an exhibition of widespread deflation. Fundamentally we see resistances of $922.45/oz, $924.74/oz, $928.16/oz, $930.72/oz and $933.86/oz. To the downside, find supports of $919.32/oz, $916.98/oz, $915.16/oz, and $911.78/oz. Gold is currently trading at $921.85/oz.
Disclaimer: FastBrokers' market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice or as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.All materials are proprerty of Fast Trading services, LLC and unless otherwise indicated, any unauthorised reproduction is prohibited.
Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.
The EUR/USD has recovered well from Monday’s lows despite a lower than expected CPI Flash Estimate. The large movement upwards is a bit confusing considering declining prices imply the ECB may need to get more aggressive with its monetary policy at Thursday’s meeting. Analysts are expecting the ECB to lower its benchmark rate to 1% and the use of quantitative easing is on the table. Monetary easing is normally negative for a currency, hence why the surge taking place this morning is a bit out of place. As a result, we view the appreciation of the Euro against the Dollar over the last 24 hours as buyers taking advantage of oversold conditions. On an encouraging note, for those long the EUR/USD the currency pair didn’t even come close to the psychological 1.30 level and our 1st tier uptrend line. Therefore, the short-term uptrend is still in play. The defining point for the uptrend will be whether the EUR/USD can brave above our 2nd tier uptrend and medium-term downtrend lines. The U.S. will release the Chicago PMI and CB Consumer Confidence data today. However, all eyes will be on U.S. equities to see if the S&P futures can recover from yesterday’s large selloff. We anticipate the positive correlation between the EUR/USD and S&P futures to continue until Thursday’s ECB meeting. Fundamentally, we find supports of 1.3291, 1.3253, 1.3205, 1.3162, and 1.3124. To the topside, we see resistances of 1.3334, 1.3366, 1.3409, and 1.3446. The 1.35 area serves as a psychological barrier with 1.30 acting as a heavily-weighted psychological cushion. The EUR/USD is currently exchanging at 1.3308.
GBP/USD
The Pound appreciated against the Dollar after GfK Consumer Confidence came in above analyst expectations and British retailing giant Marks and Spencer reported an improvement in earnings. The GBP/USD proceeded to experience considerable strength from our medium-term downtrend line, and is fighting towards our 2nd tier uptrend line as we type. The bounce in the Cable is encouraging considering it happened comfortably above our 1st tier uptrend line. However, the rally is fueled mostly by oversold conditions since we don’t view the above-mentioned news as game-changing. Additionally, the up-bars and supported by insufficient volume. U.S. financials are still in serious trouble, applying downward pressure on equities. Considering the financial industry comprises nearly 25% of Britain’s GDP, another setback in U.S. financials would likely have negative repercussions for the British economy. Britain and America are coupled, and both central banks are implementing quantitative easing. Hence, it’s difficult to place one’s full weight behind an uptrend in the GBP/USD. Regardless, the near-term uptrend is beating out our medium-term downtrend for the time being. Therefore, we will have to see how the trend plays out with the much-anticipated G20 Summit approaching. As with the EUR/USD, we anticipate the GBP/USD staying true to its positive correlation with U.S. equities. Fundamentally, we find resistance of 1.4326 with additional resistances hanging at 1.4362, 1.4398, and 1.4437. The 1.45 area will serve as a psychological barrier with 1.40 acting as a highly psychological cushion. To the downside, we see supports of 1.4283, 1.4240, 1.4208, 1.4159, and 1.4100. The GBP/USD is currently exchanging at 1.4298.
USD/JPY
The USD/JPY continues its sideways battle as investors await the incoming Tankan Manufacturing Index. Japan released some mixed data earlier today, including worse than expected Unemployment and Average Cash Earnings numbers. On the flipside, Household Spending declined less than expected. Despite the encouraging Household Spending number, the data coming from Japan reiterates the same negative theme. Though new economic stimulus seems imminent, Aso and the BOJ aren’t budging as the G20 Summit approaches. The inactivity from the BOJ combined with discouraging economic data is sending the USD/JPY back towards the crest of February highs. However, it seems investors will wait for the Tankan Index before deciding whether to send the currency pair towards 100. The USD/JPY’s incessant battle with February highs indicates the significance of present levels. If the Tankan is much worse than expected, then we could see the USD/JPY launch out of its trading range towards new highs. However, don’t forget the downtrend is nearby. If the USD/JPY fails to retest 100 this time around, we could see the currency pair collapse back into its debilitating downtrend. Fundamentally, we see resistances of 99.06, 99.79, 100.28, 100.71, and 101.44. To the downside, we find supports of 98.16, 97.66, 96.65, and 95.98. The USD/JPY is currently exchanging at 98.54.
Crude Oil
Crude bounced off our 1st tier uptrend line beautifully yesterday after a massive selloff in reaction to the possible bankruptcy of GM and Chrysler. As we stated in our previous post, the failure of the major U.S. auto manufacturers takes a large bite out of demand from several sides. Higher unemployment implies a reduction in automobile purchases and consumption of crude. Additionally, we must consider the crude utilized to both manufacture and distribute the automobiles. With the S&P below 800 and global consumption and production levels coming into question again, there were sufficient reasons to send crude futures tumbling lower. Crude futures are trying to recover Tuesday morning but are struggling mightily with the psychological $50/bbl level. Despite the bounce taking place right now, the debilitating downtrend resurfaced in a hurry. While investors may stabilize crude futures a bit during today’s session, all eyes will be on Japan’s release of its Tankan Manufacturing Index tomorrow. The U.S. will follow with manufacturing and employment data of its own, not to mention the weekly crude oil inventory number. Therefore, the 1st tier uptrend line will sure be tested in the next 24-48 hours. If the uptrend can’t hold, then we could see another massive near-term selloff in both crude and the S&P futures. However, before we get ahead of ourselves, the uptrend is still intact and we’ll have to take a wait and see approach. Fundamentally, we find resistances of $49.49/bbl, $49.81/bbl, $50.41/bbl, and $50.79/bbl. To the downside, we see supports of $49.11/bbl, $48.51/bbl, $48.03/bbl, and $47.61/bbl. The crude futures are presently trading at $49.21/bbl.
Gold
Gold is bouncing up while exhibiting a positive correlation with the Euro and Pound. The precious metal managed to avoid a retest of $900/oz. and stabilized on our previous bottom-end of $908.66/oz. We’re noticing a clear theme in terms of correlation. Gold is opting for a positive correlation with the EUR/USD, GBP/USD and U.S. equities. Therefore, we encourage investors to analyze Gold’s correlations before executing a trade on the precious metal. Gold’s uptrend has been rescued once again with our last-resort 1st tier uptrend fading into the distance. However, the medium-term downtrend line is bearing down on price, and we may witness some sideways movement until the two reach an inflection point. Our downtrend line should prove to be a formidable challenge with the possibility of a triple-top approaching. Ultimately, the path of Gold will rely on the state of U.S. equities and the American economy. If the S&P can’t recover and equities head for another leg down, we could see Gold and commodities follow suit in an exhibition of widespread deflation. Fundamentally we see resistances of $922.45/oz, $924.74/oz, $928.16/oz, $930.72/oz and $933.86/oz. To the downside, find supports of $919.32/oz, $916.98/oz, $915.16/oz, and $911.78/oz. Gold is currently trading at $921.85/oz.
Disclaimer: FastBrokers' market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice or as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.All materials are proprerty of Fast Trading services, LLC and unless otherwise indicated, any unauthorised reproduction is prohibited.
Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.
