EUR/USD
The EUR/USD is picking itself up after yesterday’s losses, preventing a close on the 4-hour below 3/30 lows. Strength in the EUR/USD comes despite a higher than expected Unemployment Rate for the EU region. We notice a tight positive correlation between the EUR/USD and the S&P futures as we’ve seen throughout the economic crisis. Investors expect a recovery in the EU region to follow stabilization in America’s economy, improving the outlook for German and French manufacturing. Hence, the EUR/USD is shrugging off the EU unemployment data and following the S&P futures higher. The fact the EUR/USD avoided re-entering the February trading range on March 30th and today’s lows are above March 30 lows sets the stage for the continuation of an uptrend rally. The EUR/USD is trading comfortably above our 1st tier uptrend line. The next challenge for the EUR/USD will be March 31 highs and our 2nd tier uptrend line. However, the true test will be our approaching medium-term downtrend line. Flying under the G20 radar is the ECB meeting on Thursday. While analysts are expecting a 50 basis point cut in the benchmark rate, investors will be more interested in the language coming from Claude Trichet regarding future monetary policy and the ECB’s present stance on quantitative easing. With all of the news taking place this week, we anticipate the high volatility to continue for at least the next few sessions. Fundamentally, we find supports of 1.3205, 1.3162, 1.3124, and 1.3088. To the topside, we see resistances of 1.3253, 1.3291, 1.3334, 1.3366 and 1.3409. 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 1.3233.
GBP/USD
The Cable is showing considerable strength against both the Dollar and the Euro. The GBP/USD continues its impressive rally from our near-term downtrend line and is approaching our 2nd tier uptrend line. The relative strength of the Pound comes on the heels of an encouraging improvement in Britain’s Manufacturing PMI data. The rally taking place in the S&P futures is only helping considering the positive correlation between U.S. equities and the GBP/USD. However, it will be interesting to see if the Cable can maintain its upward momentum if U.S. equities head south. The two economies are so intertwined that the correlation should ultimately take control of the trend. That being said, while the momentum for the Cable is to the upside, our 2nd tier uptrend line and psychological 1.45 area should prove to be worthy opponents. Additionally, the GBP/USD has logged more volume on its recent descent compared to the present incline. Therefore, investors haven’t fully bought into a stronger Pound. If the GBP/USD can brave through our 1.4492 resistance, then we could see a nice poop towards 1.4549 before investors hesitate to catapult the currency pair well beyond 1.45. Fundamentally, we find resistance of 1.4398 with additional resistances hanging at 1.4437, 1.4467, 1.4492 and 1.4549. 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 1.4362, 1.4326, 1.4283, and 1.4240. The GBP/USD is currently exchanging at 1.4395.
USD/JPY
The USD/JPY is making another move to break out of February highs on Wednesday as the Tankan Manufacturing Index came in below analyst expectations. However, we have not seen as severe of a reaction to the upside as we expected. Perhaps investors are tempered by the news the U.S. government will likely opt for the bankruptcy of GM and Chrysler. Regardless, the deterioration of the Japanese economy is outpacing even reduced analyst expectations while U.S. economic data has shown signs of stabilization. Therefore, with the Carry Trade unwound, the U.S. is clearly winning the battle between the two economies. Hence, a retest of 100 seems all but inevitable. However, the currency pair still hasn’t broken out of the difficult February highs. Until it does, the USD/JPY will remain mired in its consolidation. On the other hand, if and when the USD/JPY climbs out of the trading range, we expect to see a return to high volatility for the near-term. Meanwhile, investors will keep an eye on monetary policy discussions taking place at the G20 while the U.S. releases ADP Non-Farm Employment Change, SIM Manufacturing PMI, and Pending Home Sales. Fundamentally, we maintain our resistances of 99.06, 99.79, 100.28, 100.71, and 101.44. To the downside, we hold our supports of 98.16, 97.66, 96.65, and 95.98. The USD/JPY is currently exchanging at 98.91.
Crude Oil
Crude futures are sitting right on our 1st tier uptrend line as investors await key economic data from the U.S. including the weekly Crude Oil Inventory number. Inventories have risen beyond analyst expectations for the last four weeks. Crude futures are already under pressure from what appears to be pending bankruptcies from both GM and Chrysler. Considering the impact the failure of two of America’s major car manufacturers are having on the outlook for future consumption, higher than expected inventories could send crude futures spiraling lower. Crude futures are already trading below the psychological $50/bbl. If our 1st tier uptrend line can’t hold, we could see the futures drop suddenly towards the $45.50/bbl-$46/bbl area. On the other hand, if crude futures can fight back above the 1st tier uptrend line, they still have to face the highly-psychological $50/bbl. Therefore, the momentum is to the downside for crude. Fundamentally, we find resistances of $49.01/bbl, $49.49/bbl, $49.81/bbl, and $50.41/bbl. To the downside, we see supports of $48.51/bbl, $48.03/bbl, $47.61/bbl, $47.18/bbl, and $46.67/bbl. Crude futures are presently trading at $48.55/bbl.
Gold
Gold is rallying Wednesday, following the appreciation of the Euro and the Pound. The correlation between Gold and the EUR/USD and GBP/USD is becoming clearer by the day. However, the correlation is odd since these two currency pairs are positively correlated with the S&P futures when Gold is normally negatively correlated with U.S. equities. As a result, Gold is opting to exhibit a positive correlation with U.S. equities, a strange occurrence we’ve witnessed periodically throughout the economic crisis. Gold has normally shown a positive correlation with the S&P futures during large legs down in the past, which could be foreboding for U.S. equities. Technically speaking, the precious metal is trading well above our 1st tier uptrend line while approaching our 2nd tier. Gold managed to avoid retesting $900/oz, so the uptrend is safe for the time being. However, the near-term downtrend line is approaching, and it will be interesting to see Gold’s reaction once it reaches an inflection point with our 2nd tier uptrend line. Fundamentally we see resistances of $928.16/oz, $930.72/oz, $933.86/oz, $936.14/oz, and $939.27/oz. To the downside, find supports of $924.74/oz, $922.45/oz, $919.32/oz, and $916.98/oz. Gold is currently trading at $925.85/oz.
S&P
The rally in the S&P futures fizzled yesterday to end with modest gains. Uncertainty is returning to the market as the bankruptcy of both GM and Chrysler seem more likely by the day. The failure of these two large auto manufacturers could have a systemic impact on unemployment and consumption, further weakening a sagging U.S. economy. Though financials finished with large gains on Tuesday, they still sit at questionable levels. The S&P futures were fighting to close back above the highly-psychological 800 level earlier today, but the futures are faltering after the ADP Non-Farm Employment change came in much lower than analyst expectations. To make matters worse, the last release was revised downwards. With Pending Home Sales and the ISM Manufacturing PMI on deck, the S&P futures could be under increasing selling pressure if these data points also disappoint expectations. The fact that the futures are settling for a sub-800 reality indicate any movements downwards could be swift and sharp. Meanwhile, crude futures are losing a psychological battle of their own, failing to boost back above the $50/bbl level. Additionally, the 30 Year T-Bond futures are breaking out after stabilizing above their near-term downtrend line. Hence, the correlations are all pointing towards a sell-off in the S&P. The much-anticipated G20 Summit begins today. If the big players at the summit make limited progress in plans for modifying in the international financial system, the selloff in the S&P futures could exacerbate in the near-term. With the negatives out of the way, the S&P futures are beginning to build a nice base with all of their erratic movements. Therefore, the futures are holding out with the hope that the bulls can come help stabilize and send the market back into its near-term uptrend. The S&P futures will have to get through our 3rd tier downtrend line 1st, which proved to be a reliable foe yesterday. Therefore, we’re witnessing a significant battle between the near-term uptrend and medium-term downtrend. It is likely the fight could be resolved by the end of the week considering all of the data and economic news we’ll be taking in over the next few trading sessions. Fundamentally, we find resistances of 790.25, 794.5, 801.75, 811.75, and 821.5. To the downside, we see supports of 782.5, 775, 769.5, 761, and 755. The S&P futures are currently trading at 785.50.
30 Year
The 30 Year T-Bond futures have performed nicely over the last 24 hours and look to attack their 3/19 highs. The strength in the 30 Year futures contradicts those optimistic on U.S. equities. However, we can’t disregard the historical movements made on 3/18 and 3/19 after the Federal Reserve announced its plan to participate in quantitative easing. We expected reflections from such a large movement backed by high volume, and this prediction may be coming true. The 30 Year futures are making a statement by distancing themselves from our near-term downtrend line. Therefore, we wouldn’t be surprised to see a breakout to the upside approaching. However, such a movement would likely require an accompanying decline in the S&P futures. While investors were previously worried supply of U.S. Treasuries would outpace demand as the U.S. pays for a historical stimulus plan and international economies deteriorate, the use of quantitative easing will likely keep demand in check while fueling the 30 Year’s momentum to the upside. Our next two resistances should prove critical before the 30 Year T-Bond futures can experience a sizable rally. Fundamentally, we find resistances of 130.047, 130.563, 130.969, and 131.547. To the downside, we see supports of 129.406, 128.984, 128.516, and 128.063. The 30 Year T-Bond futures are presently trading at 129 23.5.
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 is picking itself up after yesterday’s losses, preventing a close on the 4-hour below 3/30 lows. Strength in the EUR/USD comes despite a higher than expected Unemployment Rate for the EU region. We notice a tight positive correlation between the EUR/USD and the S&P futures as we’ve seen throughout the economic crisis. Investors expect a recovery in the EU region to follow stabilization in America’s economy, improving the outlook for German and French manufacturing. Hence, the EUR/USD is shrugging off the EU unemployment data and following the S&P futures higher. The fact the EUR/USD avoided re-entering the February trading range on March 30th and today’s lows are above March 30 lows sets the stage for the continuation of an uptrend rally. The EUR/USD is trading comfortably above our 1st tier uptrend line. The next challenge for the EUR/USD will be March 31 highs and our 2nd tier uptrend line. However, the true test will be our approaching medium-term downtrend line. Flying under the G20 radar is the ECB meeting on Thursday. While analysts are expecting a 50 basis point cut in the benchmark rate, investors will be more interested in the language coming from Claude Trichet regarding future monetary policy and the ECB’s present stance on quantitative easing. With all of the news taking place this week, we anticipate the high volatility to continue for at least the next few sessions. Fundamentally, we find supports of 1.3205, 1.3162, 1.3124, and 1.3088. To the topside, we see resistances of 1.3253, 1.3291, 1.3334, 1.3366 and 1.3409. 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 1.3233.
GBP/USD
The Cable is showing considerable strength against both the Dollar and the Euro. The GBP/USD continues its impressive rally from our near-term downtrend line and is approaching our 2nd tier uptrend line. The relative strength of the Pound comes on the heels of an encouraging improvement in Britain’s Manufacturing PMI data. The rally taking place in the S&P futures is only helping considering the positive correlation between U.S. equities and the GBP/USD. However, it will be interesting to see if the Cable can maintain its upward momentum if U.S. equities head south. The two economies are so intertwined that the correlation should ultimately take control of the trend. That being said, while the momentum for the Cable is to the upside, our 2nd tier uptrend line and psychological 1.45 area should prove to be worthy opponents. Additionally, the GBP/USD has logged more volume on its recent descent compared to the present incline. Therefore, investors haven’t fully bought into a stronger Pound. If the GBP/USD can brave through our 1.4492 resistance, then we could see a nice poop towards 1.4549 before investors hesitate to catapult the currency pair well beyond 1.45. Fundamentally, we find resistance of 1.4398 with additional resistances hanging at 1.4437, 1.4467, 1.4492 and 1.4549. 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 1.4362, 1.4326, 1.4283, and 1.4240. The GBP/USD is currently exchanging at 1.4395.
USD/JPY
The USD/JPY is making another move to break out of February highs on Wednesday as the Tankan Manufacturing Index came in below analyst expectations. However, we have not seen as severe of a reaction to the upside as we expected. Perhaps investors are tempered by the news the U.S. government will likely opt for the bankruptcy of GM and Chrysler. Regardless, the deterioration of the Japanese economy is outpacing even reduced analyst expectations while U.S. economic data has shown signs of stabilization. Therefore, with the Carry Trade unwound, the U.S. is clearly winning the battle between the two economies. Hence, a retest of 100 seems all but inevitable. However, the currency pair still hasn’t broken out of the difficult February highs. Until it does, the USD/JPY will remain mired in its consolidation. On the other hand, if and when the USD/JPY climbs out of the trading range, we expect to see a return to high volatility for the near-term. Meanwhile, investors will keep an eye on monetary policy discussions taking place at the G20 while the U.S. releases ADP Non-Farm Employment Change, SIM Manufacturing PMI, and Pending Home Sales. Fundamentally, we maintain our resistances of 99.06, 99.79, 100.28, 100.71, and 101.44. To the downside, we hold our supports of 98.16, 97.66, 96.65, and 95.98. The USD/JPY is currently exchanging at 98.91.
Crude Oil
Crude futures are sitting right on our 1st tier uptrend line as investors await key economic data from the U.S. including the weekly Crude Oil Inventory number. Inventories have risen beyond analyst expectations for the last four weeks. Crude futures are already under pressure from what appears to be pending bankruptcies from both GM and Chrysler. Considering the impact the failure of two of America’s major car manufacturers are having on the outlook for future consumption, higher than expected inventories could send crude futures spiraling lower. Crude futures are already trading below the psychological $50/bbl. If our 1st tier uptrend line can’t hold, we could see the futures drop suddenly towards the $45.50/bbl-$46/bbl area. On the other hand, if crude futures can fight back above the 1st tier uptrend line, they still have to face the highly-psychological $50/bbl. Therefore, the momentum is to the downside for crude. Fundamentally, we find resistances of $49.01/bbl, $49.49/bbl, $49.81/bbl, and $50.41/bbl. To the downside, we see supports of $48.51/bbl, $48.03/bbl, $47.61/bbl, $47.18/bbl, and $46.67/bbl. Crude futures are presently trading at $48.55/bbl.
Gold
Gold is rallying Wednesday, following the appreciation of the Euro and the Pound. The correlation between Gold and the EUR/USD and GBP/USD is becoming clearer by the day. However, the correlation is odd since these two currency pairs are positively correlated with the S&P futures when Gold is normally negatively correlated with U.S. equities. As a result, Gold is opting to exhibit a positive correlation with U.S. equities, a strange occurrence we’ve witnessed periodically throughout the economic crisis. Gold has normally shown a positive correlation with the S&P futures during large legs down in the past, which could be foreboding for U.S. equities. Technically speaking, the precious metal is trading well above our 1st tier uptrend line while approaching our 2nd tier. Gold managed to avoid retesting $900/oz, so the uptrend is safe for the time being. However, the near-term downtrend line is approaching, and it will be interesting to see Gold’s reaction once it reaches an inflection point with our 2nd tier uptrend line. Fundamentally we see resistances of $928.16/oz, $930.72/oz, $933.86/oz, $936.14/oz, and $939.27/oz. To the downside, find supports of $924.74/oz, $922.45/oz, $919.32/oz, and $916.98/oz. Gold is currently trading at $925.85/oz.
S&P
The rally in the S&P futures fizzled yesterday to end with modest gains. Uncertainty is returning to the market as the bankruptcy of both GM and Chrysler seem more likely by the day. The failure of these two large auto manufacturers could have a systemic impact on unemployment and consumption, further weakening a sagging U.S. economy. Though financials finished with large gains on Tuesday, they still sit at questionable levels. The S&P futures were fighting to close back above the highly-psychological 800 level earlier today, but the futures are faltering after the ADP Non-Farm Employment change came in much lower than analyst expectations. To make matters worse, the last release was revised downwards. With Pending Home Sales and the ISM Manufacturing PMI on deck, the S&P futures could be under increasing selling pressure if these data points also disappoint expectations. The fact that the futures are settling for a sub-800 reality indicate any movements downwards could be swift and sharp. Meanwhile, crude futures are losing a psychological battle of their own, failing to boost back above the $50/bbl level. Additionally, the 30 Year T-Bond futures are breaking out after stabilizing above their near-term downtrend line. Hence, the correlations are all pointing towards a sell-off in the S&P. The much-anticipated G20 Summit begins today. If the big players at the summit make limited progress in plans for modifying in the international financial system, the selloff in the S&P futures could exacerbate in the near-term. With the negatives out of the way, the S&P futures are beginning to build a nice base with all of their erratic movements. Therefore, the futures are holding out with the hope that the bulls can come help stabilize and send the market back into its near-term uptrend. The S&P futures will have to get through our 3rd tier downtrend line 1st, which proved to be a reliable foe yesterday. Therefore, we’re witnessing a significant battle between the near-term uptrend and medium-term downtrend. It is likely the fight could be resolved by the end of the week considering all of the data and economic news we’ll be taking in over the next few trading sessions. Fundamentally, we find resistances of 790.25, 794.5, 801.75, 811.75, and 821.5. To the downside, we see supports of 782.5, 775, 769.5, 761, and 755. The S&P futures are currently trading at 785.50.
30 Year
The 30 Year T-Bond futures have performed nicely over the last 24 hours and look to attack their 3/19 highs. The strength in the 30 Year futures contradicts those optimistic on U.S. equities. However, we can’t disregard the historical movements made on 3/18 and 3/19 after the Federal Reserve announced its plan to participate in quantitative easing. We expected reflections from such a large movement backed by high volume, and this prediction may be coming true. The 30 Year futures are making a statement by distancing themselves from our near-term downtrend line. Therefore, we wouldn’t be surprised to see a breakout to the upside approaching. However, such a movement would likely require an accompanying decline in the S&P futures. While investors were previously worried supply of U.S. Treasuries would outpace demand as the U.S. pays for a historical stimulus plan and international economies deteriorate, the use of quantitative easing will likely keep demand in check while fueling the 30 Year’s momentum to the upside. Our next two resistances should prove critical before the 30 Year T-Bond futures can experience a sizable rally. Fundamentally, we find resistances of 130.047, 130.563, 130.969, and 131.547. To the downside, we see supports of 129.406, 128.984, 128.516, and 128.063. The 30 Year T-Bond futures are presently trading at 129 23.5.
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.
