EUR/USD
The EUR/USD topped out at our 3rd tier uptrend line yesterday and is contracting quickly as U.S. equities look to open sharply lower for the second straight session. Lacking economically fundamental reasons for dropping, the EUR/USD is reacting to psychological blows dealt by George Soros and the IMF. Yesterday Soros reiterated his skepticism regarding the solvency of U.S. banks, and the IMF is rumored to announce it predicts that U.S. financials are exposed to over $3 trillion worth of toxic assets. Additionally, the EUR/USD was already in a comparatively weak position against the Dollar as compared to most other major pairs due to the uncertainty regarding future ECB monetary policy. The ECB is maintaining a loose policy stance by leaving the door open to possible currency intervention and quantitative easing if the economic environment should darken. These factors combined are leaving the early April rally with a question mark as opposed to an exclamation point. The EUR/USD failed to breach March highs and the currency pair has tumbled back below the psychological 1.35 mark. The EUR/USD fell beneath our 1st tier downtrend line in the process. On the bright side, the 1st tier uptrend line is alive, and April lows are intact. However, the EUR/USD is suddenly throwing the whole idea of a lasting uptrend into doubt. Therefore, the possibility remains that the economic storm returns and investors run to the Dollar for safety. As a result, the uptrend and downtrends are squaring off once again with all eyes on the financial sector. The chips remains in the corner for the uptrend for now since the reasons for the present pullback are psychologically motivated. We won’t see any economic data from either the EU or the U.S. until tomorrow as focus shifts towards corporate earnings. Fundamentally, we find supports of 1.3223, 1.3192, 1.3162, 1.3126 and 1.3088. To the topside, we see resistances of 1.3271, 1.3323, 1.3351, 1.3375 and 1.3413. The 1.35 area becomes a psychological barrier again with 1.30 serving as a key psychological cushion. The EUR/USD is currently exchanging at 1.3271.
GBP/USD
The Cable followed U.S. equities and the Euro lower yesterday and investor uncertainty returned concerning the state of financials. However, the downward movements of the GBP/USD remain less exaggerated than the EUR/USD due to the consistent improvement in British economic data. Today’s manufacturing and industrial production numbers reiterated this trend, as both came in encouragingly above analyst expectations. Once again the relative strength of the Pound is revealed in the weakness of the EUR/GBP. It appears as if the EUR/GBP could make a large leg down as the currency pair tests April lows and the psychological .90 level. Consequently, the Cable sits comfortably above our 1st tier uptrend line and its psychological level of 1.45. However, we must insert a note of caution. The GBP/USD failed to breach February highs. Hence, even though the uptrend is intact, this missed opportunity leaves open the door for the possibility of a retracement into its depressing medium-term downtrend. Ultimately, the trend of the GBP/USD will rely on the performance of U.S. financials. The financial industry comprises a large portion of Britain’s GDP. Therefore, if U.S. banks do in fact encounter a new wave of troubles, British financials would be inextricably impacted and the Cable would have no choice to follow U.S. equities lower. However, throwing caution to the wind, the uptrend is alive and well and the stance remains to the upside in both the GBP/USD and EUR/USD until we receive some game changing, economically fundamental events. Fundamentally, we find resistance of 1.4730 with additional resistances hanging at 1.4770, 1.4834, 1.4883 and 1.4946. The 1.50 level serves as a key psychological barrier while the 1.45 area acts as a psychological cushion. To the downside, we see supports of 1.4676, 1.4612, 1.4571, 1.4538 and 1.4484. The GBP/USD is currently exchanging at 1.4702.
USD/JPY
The USD/JPY topped out yesterday and is reencountering the key 100 level as we anticipated. 100 is such a critical psychological hurdle that it’s no surprise the currency pair is hesitating to leave it behind. The BOJ kept its benchmark rate at 0.1% today with little to no wiggle room monetarily. However, the BOJ announced the initiation of new, vague quantitative easing tactics to try and liquefy the Yen. The announcement is having an inconsequential impact on the USD/JPY and its path is still highly reliant on the performance of the two economies. The USD/JPY is sticking above 100 and March highs for now, a positive sign for the uptrend. However, if U.S. equities should crumble under the pressure of financials, then the USD/JPY should reluctantly exercise its positive correlation with the S&P futures and follow suit. That being said, the fresh near-term uptrend remains intact for now as the trends approach a face-off. Though the U.S. won’t release any significant data, Japan will announce its Current Account late Tuesday and the BOJ Monthly Report Wednesday morning, giving investors a bird’s eye view of the economic data guiding the decisions of the BOJ. Fundamentally, we find resistances of 100.71, 101.44, 101.98, 102.50, and 103.10. To the downside, we see supports of 100.28, 99.79, 99.06, 98.16, and 97.59. The USD/JPY is currently exchanging at 100.33.
Crude Oil
The selloff in crude has really gained traction, dropping below our previous 1st tier uptrend line and the highly psychological $50/bbl level. Crude futures failed to close above our 1st tier downtrend line on the 4-hour yesterday. Crude is stepping in line with U.S. equities as economist heavy weights publicly question the validity of the near-term uptrend in U.S. equities. We haven’t seen any concrete economic fundamentals to justify the present pullback due to the lack of data releases. However, the earnings season kicks off with Alcoa after the bell and investors will begin to get the picture of how corporate heavy-weights fared last quarter. As for crude, corporate earnings signify present and expected production and consequential consumption of energy-based commodities. Therefore, we expect the tight positive correlation between crude and the S&P futures to continue for the time being. The U.S. will release weekly crude inventories tomorrow and the number and disappointed expectations for four straight weeks. Rising inventories are placing more downward pressure on the price of crude. However, if U.S. equities and crude happen to swing back into their debilitating economic crisis downtrend, we wouldn’t be surprised to see OPEC enter with new supply cuts. As for today, it will be interesting to see if crude can fight back to $50/bbl as investors try to hold the psychological threshold. Regardless, the support has been broken, creating a challenging path to the upside for crude. We created a new 1st tier uptrend line which represents our point of no return as far as the uptrend is concerned. Therefore, we will keep a close eye on this trend line to see if it holds. Fundamentally, we find resistances of $49.93/bbl, $50.42/bbl, $50.76/bbl, $51.28/bbl, and $53.30/bbl. To the downside, we see supports of $49.47/bbl, $48.98/bbl, $48.52/bbl, $48.12/bbl, and $47.12/bbl. Crude futures are presently trading at $49.51/bbl.
Gold
Gold finally found bottom yesterday, gaining on the weakness in U.S. equities. However, the rise is insignificant thus far compared to the fundamental losses experienced over the last few sessions. The backbone of the uptrend was broken with the passing of our 1st tier downtrend line and the highly psychological $900/oz. The fundamentally weak position of gold is a positive sign for equities unless we are heading for all-around deflation as we experienced during the height of the economic crisis. That being said, we have little reason to be positive on gold trend wise. However, we wouldn’t be surprised to see some near-term gains in the precious metal due to oversold conditions and the current weakness in the S&P futures. The only possibility of gold surging back into its uptrend would be a complete collapse in U.S. equities with full participation in the positive correlation between the investment vehicles. Fundamentally we hold our resistances of $881.57/oz, $884.10/oz, $887.21/oz, $890.64/oz, and $894.46/oz. To the downside, we maintain our supports of $877.02/oz, $873.74/oz, $870.47/oz, $866.11, and $862.30/oz. Gold is currently trading at $878.45/oz.
30 Year
The 30 Year T-Bond futures have failed to climb back above our downtrend line and March 26 lows despite weakness in U.S. equities. Therefore, the 30 Year futures could be transmitting the same message as gold in that the present selloff in U.S. equities is only temporary. On the other hand, the selloff in the 30 Year futures could be disconcerting in the fact that the movement represents disinterest in the massive treasury auctions taking place to fund America’s economic initiatives. As a result, the downward movement in the 30 Year futures could indicate an insufficient impact from the Fed’s use of quantitative easing due to booming supply and waning demand. We can’t forget March 18th’s historical rise in reaction to the Fed’s announcement of quantitative easing, and we wouldn’t be surprised to see high volatility return to the 30 Year futures shortly. However, before we tread too far down the speculative path, we will take the current downturn in the 30 Year futures as a normal negative correlation with U.S. equities. The trend in the 30 Year futures remains to the downside barring a significant fundamental reversal. Fundamentally, we find resistances of 127.05, 127.28, 127.64, 127.89, and 128.31. To the downside, we see supports of 126.69, 126.45, 126.19, 125.91, and 125.47. The 30 Year T-Bond futures are presently trading at 126 24.0.
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 topped out at our 3rd tier uptrend line yesterday and is contracting quickly as U.S. equities look to open sharply lower for the second straight session. Lacking economically fundamental reasons for dropping, the EUR/USD is reacting to psychological blows dealt by George Soros and the IMF. Yesterday Soros reiterated his skepticism regarding the solvency of U.S. banks, and the IMF is rumored to announce it predicts that U.S. financials are exposed to over $3 trillion worth of toxic assets. Additionally, the EUR/USD was already in a comparatively weak position against the Dollar as compared to most other major pairs due to the uncertainty regarding future ECB monetary policy. The ECB is maintaining a loose policy stance by leaving the door open to possible currency intervention and quantitative easing if the economic environment should darken. These factors combined are leaving the early April rally with a question mark as opposed to an exclamation point. The EUR/USD failed to breach March highs and the currency pair has tumbled back below the psychological 1.35 mark. The EUR/USD fell beneath our 1st tier downtrend line in the process. On the bright side, the 1st tier uptrend line is alive, and April lows are intact. However, the EUR/USD is suddenly throwing the whole idea of a lasting uptrend into doubt. Therefore, the possibility remains that the economic storm returns and investors run to the Dollar for safety. As a result, the uptrend and downtrends are squaring off once again with all eyes on the financial sector. The chips remains in the corner for the uptrend for now since the reasons for the present pullback are psychologically motivated. We won’t see any economic data from either the EU or the U.S. until tomorrow as focus shifts towards corporate earnings. Fundamentally, we find supports of 1.3223, 1.3192, 1.3162, 1.3126 and 1.3088. To the topside, we see resistances of 1.3271, 1.3323, 1.3351, 1.3375 and 1.3413. The 1.35 area becomes a psychological barrier again with 1.30 serving as a key psychological cushion. The EUR/USD is currently exchanging at 1.3271.
GBP/USD
The Cable followed U.S. equities and the Euro lower yesterday and investor uncertainty returned concerning the state of financials. However, the downward movements of the GBP/USD remain less exaggerated than the EUR/USD due to the consistent improvement in British economic data. Today’s manufacturing and industrial production numbers reiterated this trend, as both came in encouragingly above analyst expectations. Once again the relative strength of the Pound is revealed in the weakness of the EUR/GBP. It appears as if the EUR/GBP could make a large leg down as the currency pair tests April lows and the psychological .90 level. Consequently, the Cable sits comfortably above our 1st tier uptrend line and its psychological level of 1.45. However, we must insert a note of caution. The GBP/USD failed to breach February highs. Hence, even though the uptrend is intact, this missed opportunity leaves open the door for the possibility of a retracement into its depressing medium-term downtrend. Ultimately, the trend of the GBP/USD will rely on the performance of U.S. financials. The financial industry comprises a large portion of Britain’s GDP. Therefore, if U.S. banks do in fact encounter a new wave of troubles, British financials would be inextricably impacted and the Cable would have no choice to follow U.S. equities lower. However, throwing caution to the wind, the uptrend is alive and well and the stance remains to the upside in both the GBP/USD and EUR/USD until we receive some game changing, economically fundamental events. Fundamentally, we find resistance of 1.4730 with additional resistances hanging at 1.4770, 1.4834, 1.4883 and 1.4946. The 1.50 level serves as a key psychological barrier while the 1.45 area acts as a psychological cushion. To the downside, we see supports of 1.4676, 1.4612, 1.4571, 1.4538 and 1.4484. The GBP/USD is currently exchanging at 1.4702.
USD/JPY
The USD/JPY topped out yesterday and is reencountering the key 100 level as we anticipated. 100 is such a critical psychological hurdle that it’s no surprise the currency pair is hesitating to leave it behind. The BOJ kept its benchmark rate at 0.1% today with little to no wiggle room monetarily. However, the BOJ announced the initiation of new, vague quantitative easing tactics to try and liquefy the Yen. The announcement is having an inconsequential impact on the USD/JPY and its path is still highly reliant on the performance of the two economies. The USD/JPY is sticking above 100 and March highs for now, a positive sign for the uptrend. However, if U.S. equities should crumble under the pressure of financials, then the USD/JPY should reluctantly exercise its positive correlation with the S&P futures and follow suit. That being said, the fresh near-term uptrend remains intact for now as the trends approach a face-off. Though the U.S. won’t release any significant data, Japan will announce its Current Account late Tuesday and the BOJ Monthly Report Wednesday morning, giving investors a bird’s eye view of the economic data guiding the decisions of the BOJ. Fundamentally, we find resistances of 100.71, 101.44, 101.98, 102.50, and 103.10. To the downside, we see supports of 100.28, 99.79, 99.06, 98.16, and 97.59. The USD/JPY is currently exchanging at 100.33.
Crude Oil
The selloff in crude has really gained traction, dropping below our previous 1st tier uptrend line and the highly psychological $50/bbl level. Crude futures failed to close above our 1st tier downtrend line on the 4-hour yesterday. Crude is stepping in line with U.S. equities as economist heavy weights publicly question the validity of the near-term uptrend in U.S. equities. We haven’t seen any concrete economic fundamentals to justify the present pullback due to the lack of data releases. However, the earnings season kicks off with Alcoa after the bell and investors will begin to get the picture of how corporate heavy-weights fared last quarter. As for crude, corporate earnings signify present and expected production and consequential consumption of energy-based commodities. Therefore, we expect the tight positive correlation between crude and the S&P futures to continue for the time being. The U.S. will release weekly crude inventories tomorrow and the number and disappointed expectations for four straight weeks. Rising inventories are placing more downward pressure on the price of crude. However, if U.S. equities and crude happen to swing back into their debilitating economic crisis downtrend, we wouldn’t be surprised to see OPEC enter with new supply cuts. As for today, it will be interesting to see if crude can fight back to $50/bbl as investors try to hold the psychological threshold. Regardless, the support has been broken, creating a challenging path to the upside for crude. We created a new 1st tier uptrend line which represents our point of no return as far as the uptrend is concerned. Therefore, we will keep a close eye on this trend line to see if it holds. Fundamentally, we find resistances of $49.93/bbl, $50.42/bbl, $50.76/bbl, $51.28/bbl, and $53.30/bbl. To the downside, we see supports of $49.47/bbl, $48.98/bbl, $48.52/bbl, $48.12/bbl, and $47.12/bbl. Crude futures are presently trading at $49.51/bbl.
Gold
Gold finally found bottom yesterday, gaining on the weakness in U.S. equities. However, the rise is insignificant thus far compared to the fundamental losses experienced over the last few sessions. The backbone of the uptrend was broken with the passing of our 1st tier downtrend line and the highly psychological $900/oz. The fundamentally weak position of gold is a positive sign for equities unless we are heading for all-around deflation as we experienced during the height of the economic crisis. That being said, we have little reason to be positive on gold trend wise. However, we wouldn’t be surprised to see some near-term gains in the precious metal due to oversold conditions and the current weakness in the S&P futures. The only possibility of gold surging back into its uptrend would be a complete collapse in U.S. equities with full participation in the positive correlation between the investment vehicles. Fundamentally we hold our resistances of $881.57/oz, $884.10/oz, $887.21/oz, $890.64/oz, and $894.46/oz. To the downside, we maintain our supports of $877.02/oz, $873.74/oz, $870.47/oz, $866.11, and $862.30/oz. Gold is currently trading at $878.45/oz.
30 Year
The 30 Year T-Bond futures have failed to climb back above our downtrend line and March 26 lows despite weakness in U.S. equities. Therefore, the 30 Year futures could be transmitting the same message as gold in that the present selloff in U.S. equities is only temporary. On the other hand, the selloff in the 30 Year futures could be disconcerting in the fact that the movement represents disinterest in the massive treasury auctions taking place to fund America’s economic initiatives. As a result, the downward movement in the 30 Year futures could indicate an insufficient impact from the Fed’s use of quantitative easing due to booming supply and waning demand. We can’t forget March 18th’s historical rise in reaction to the Fed’s announcement of quantitative easing, and we wouldn’t be surprised to see high volatility return to the 30 Year futures shortly. However, before we tread too far down the speculative path, we will take the current downturn in the 30 Year futures as a normal negative correlation with U.S. equities. The trend in the 30 Year futures remains to the downside barring a significant fundamental reversal. Fundamentally, we find resistances of 127.05, 127.28, 127.64, 127.89, and 128.31. To the downside, we see supports of 126.69, 126.45, 126.19, 125.91, and 125.47. The 30 Year T-Bond futures are presently trading at 126 24.0.
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.
