EUR/USD
Though yesterday’s rally in the EUR/USD made some interesting strides by edging above 4/9 highs and our 1st tier downtrend line, investors are taking profits Tuesday. The volume was still light yesterday due to the Easter holiday and a lack of economic data. However, we could see currencies come back to life today with the U.S. releasing retail sales and PPI. Even though the EUR/GBP could experience more near-term losses, it appears the currency pair should find some support soon. Therefore, the EUR/USD may experience considerable strength around our 1st tier uptrend line and 1.3192 support, if the currency pair should reach this level. We expect the EUR/USD to remain in this volatile consolidation phase for the near-term as investors try to figure out exactly where the global economy stands. The Euro is still at a disadvantage with the ECB taking a vague monetary stance, and uncertainty hardly ever yields a positive performance in price. Will the ECB cut its benchmark further or initiate unorthodox liquidity processes? Nobody knows at this point. Since the economic data surfacing from the EU over the past month has been mixed, the ECB will likely wait to see if the signs of improvement are only a bounce or a real turn in events. We’ll witness a couple inflection points shortly, including our 1st tier uptrend and downtrend lines and our 2nd tier uptrend and downtrend lines. Therefore, the EUR/USD is signaling that it could reach a directional pivot point soon. Fundamentally, we maintain our supports of 1.3271, 1.3223, 1.3192, 1.3162, and 1.3126. To the topside, we hold our resistances of 1.3323, 1.3351, 1.3375, 1.3413, and1.3462. The 1.35 area acts a psychological barrier again with 1.30 serving as a key psychological cushion. The EUR/USD is currently exchanging at 1.3277.
GBP/USD
The Cable is making vast strides to the upside, positioning itself for a breakout opportunity as it continues to bask in the glory of this month’s all-around positive economic data from Britain. The GBP/USD is battling with our 2nd tier uptrend line as we speak. If the currency pair can climb above April and February highs we could witness some large near-term gains as it looks to tackle the highly psychological 1.50 level. The relative strength of the Pound is reflected in the freefall of the EUR/GBP. However, we wouldn’t be surprised to see the EUR/GBP find some solid near-term support, meaning that if the GBP/USD does break out, the rally could experience some profit-taking relatively quickly. That being said, Britain only has two medium-weight economic releases on slate for this week, meaning that Cable should have little news to deflect its rise. The only development fundamentally reversing the Cable’s rally in the near-term would be a sharp downturn in U.S. equities, so keep a close eye on the S&P futures. Fundamentally, we maintain resistance of 1.4946 with additional resistances hanging at 1.4988, 1.5028, 1.5080 and 1.5121. The 1.50 level serves as a key psychological barrier while the 1.45 area acts as a psychological cushion. To the downside, we find supports of 1.4883, 1.4834, 1.4770, 1.4730 and 1.4676. The GBP/USD is currently exchanging at 1.4902.
USD/JPY
The USD/JPY is still stuck around 100 as the highly-psychological level is proving to be as difficult to overcome as investors could have anticipated. The surprisingly positive Core Machinery Orders coupled with Aso’s aggressive stimulus package is countering the recent strength in America’s economy. Therefore, the USD/JPY finds itself at an important crossroads as our uptrend line reaches an inflection point with our 3rd tier downtrend line. The importance of the moment is difficult to express since all of this year’s progress made by the USD/JPY to tackle 100 is reaching a climactic point. Will the uptrend prevail or fall under the sword of the monstrous downtrend? The continuation of the uptrend largely depends on a recovery in the U.S. economy since the carry trade is unwound. Investors will be taking a close look at corporate earnings from the U.S. while anxiously awaiting to see if the recent improvement in economic data continues. Fundamentally, we maintain our resistances of 100.28, 100.71, 101.44, 101.98, and 102.50. To the downside, we hold our supports of 99.79, 99.06, 98.16, 97.59, and 97.11. The USD/JPY is currently exchanging at 99.79.
Crude Oil
Crude futures have experienced some eye-popping volatility over the last couple sessions, fluttering between our trend lines. The indecisive movements reflect investor uncertainty concerning the economy as a whole. While investors are not willing to give up on the uptrend, the downtrend is still sitting in the driver’s seat with investors unwilling to commit above our 2nd tier downtrend line. The highly psychological $50/bbl area continues to play a lead role as prices are gravitating here. Naturally, the key driving force behind the demand structure of crude is the overall health of the U.S. economy. Energy investors are waiting to see if the recovery in U.S. equities is legitimate before extending the rally in crude beyond the present fundamental hindrances. Investors are now being bombarded by news from the supply side after OPEC stayed quiet for quite some time. Crude imports are rising considerably from Russia and Brazil, likely an aftereffect from Obama improving upon diplomatic relations with the two nations. OPEC is vocalizing its discontent over the development since a rise in imports from Russia and Brazil dilute their massive production cuts implemented over the last 6 months. The new sources of crude are placing a new downward pressure on the price and could have a noticeable impact for the time being. We wouldn’t be surprised to see a more aggressive reaction from OPEC if the trend continues with the possibility of more production cuts on the table. Despite the developments supply-wise, crude futures should still maintain a positive correlation with the S&P futures, though they may be less inclined to fully participate in any large movements to the upside. We may not have to worry about that today since the economic data disappointed analysts this morning, showing a surprising decline in PPI and Retail Sales. These numbers raise a red flag, cautioning that the recent improvement in consumer sentiment could be short-lived, placing more downward pressure on crude futures. Fundamentally, we find resistances of $50.39/bbl, $51.03/bbl, $51.59/bbl, $52.02/bbl, and $52.49/bbl. To the downside, we see supports of $49.81/bbl, $49.28/bbl, $48.87/bbl, $48.37/bbl, and $47.79/bbl. Crude futures are presently trading at $49.98/bbl.
Gold
Gold climbed back to retest the highly psychological $900/oz level as anticipated. The rally is falling short with the precious metal experiencing consolidation. Though gold managed to get past our 1st tier downtrend line, our 2nd tier isn’t far away. In our eyes, gold broke the uptrend’s back on April 2nd. Therefore, the precious metal would need to accomplish some incredible fundamental feats to reinstate the uptrend. Hence, we view the precious metal’s recent rally as a healthy retest of a critical, defeated psychological support. We wouldn’t be surprised to see the negative correlation with U.S. equities to come into full swing with the S&P futures performing well. Fundamentally we see resistances of $897.82/oz, $900.76/oz, $904.26/oz, $908.72/oz, and $913.49/oz. To the downside, we find supports of $894.46/0z, $890.64/oz, $887.21/oz, $884.10/oz, and $880.71. Gold is currently trading at $894.25/oz.
S&P
The S&P futures are reversing course premarket on Tuesday after the U.S. released disappointing PPI and Retail Sales data points. The PPI numbers show the collapse in consumption resulting from the economic downturn is taking its toll on producer prices. As a result, the fear of deflation is creeping back into the picture, signaling the improvement in PPI over the past two months may have just been a head-fake. The Retail Sales numbers send the same signal, which raises concern that the concept of an economic recovery as a whole may be a head-fake. However, this is all speculation until we receive further confirmation from future data releases. The negative economic data is overshadowing better than expected earnings from Goldman Sachs and the fact both Citigroup and Bank of America logged considerable gains yesterday. Nevertheless, the S&P’s rally is falling short of February highs, implying the uptrend has its work cut out for it over the near-term. We wouldn’t be surprised to see the S&P futures dip back below our 3rd tier downtrend line today. The S&P’s correlations all reflect uncertainty among investors. The rally has been exceptional, but investors still have a voice in the back of their minds questioning whether the economic recovery is legitimate after several well-renowned economists disputed analyst claims of a turnaround. Therefore, investors may wait until the earnings season unfolds and the government releases its results from the stress tests of financials before making any more serious additional commitments in either direction. The S&P futures have surely made impressive strides to the upside by breaking through all of our foreseeable near-term downtrend lines. Therefore, if the futures can manage to weather the storm and hold above our 3rd tier downtrend line, the argument for the upside will be all stronger. Furthermore, if the S&P futures can break through February highs we could witness accelerated gains in the near-term. Fundamentally, we find supports of 839.75, 834.75, 829.5, 825, and 818.5. To the topside, we see resistances of 845.25, 850.5, 856.25, 862.5, and 869.25. The S&P futures are currently trading at 842.75.
30 Year
The 30 Year T-Bond futures are perking up pre-market on Tuesday after America’s economic data disappointed. As a result, the 30 Year futures are flexing their negative correlation with U.S. equities. Though the 30 Year futures have bounced from our 1st tier downtrend line, they haven’t made any game-changing moves to awaken from the depths of their present downtrend. The lack of follow through to the upside paints a distorted picture. On one hand, we could be witnessing insufficient demand in the bond market to compensate for the massive supply of treasuries created to fund the government’s stimulus measures despite the Fed’s use of quantitative easing. On the other hand, the 30 Year’s reluctance to the upside bolsters the argument for a recovery in U.S. equities, and consequently America’s economy. With a lack of evidence it’s difficult to commit to one argument or the other, showing the 30 Year futures may be a lagging indicator right now. That being said, the 30 Year futures should continue their positive correlation with U.S. equities while remaining in a negative stance. Fundamentally, we hold our resistances of 127.28, 127.64, 127.89, and 128.31 with fresh top-end of 128.73. To the downside, we find supports of 127.04 126.69, 126.45, 126.19, and 125.91. The 30 Year T-Bond futures are presently trading at 127 05.5.
Disclaimer: FastBrokers' market commentary is provided for information purposes only and under no circumstances should be regarded neither 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 property of Fast Trading services, LLC and unless otherwise indicated, any unauthorized 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.
Though yesterday’s rally in the EUR/USD made some interesting strides by edging above 4/9 highs and our 1st tier downtrend line, investors are taking profits Tuesday. The volume was still light yesterday due to the Easter holiday and a lack of economic data. However, we could see currencies come back to life today with the U.S. releasing retail sales and PPI. Even though the EUR/GBP could experience more near-term losses, it appears the currency pair should find some support soon. Therefore, the EUR/USD may experience considerable strength around our 1st tier uptrend line and 1.3192 support, if the currency pair should reach this level. We expect the EUR/USD to remain in this volatile consolidation phase for the near-term as investors try to figure out exactly where the global economy stands. The Euro is still at a disadvantage with the ECB taking a vague monetary stance, and uncertainty hardly ever yields a positive performance in price. Will the ECB cut its benchmark further or initiate unorthodox liquidity processes? Nobody knows at this point. Since the economic data surfacing from the EU over the past month has been mixed, the ECB will likely wait to see if the signs of improvement are only a bounce or a real turn in events. We’ll witness a couple inflection points shortly, including our 1st tier uptrend and downtrend lines and our 2nd tier uptrend and downtrend lines. Therefore, the EUR/USD is signaling that it could reach a directional pivot point soon. Fundamentally, we maintain our supports of 1.3271, 1.3223, 1.3192, 1.3162, and 1.3126. To the topside, we hold our resistances of 1.3323, 1.3351, 1.3375, 1.3413, and1.3462. The 1.35 area acts a psychological barrier again with 1.30 serving as a key psychological cushion. The EUR/USD is currently exchanging at 1.3277.
GBP/USD
The Cable is making vast strides to the upside, positioning itself for a breakout opportunity as it continues to bask in the glory of this month’s all-around positive economic data from Britain. The GBP/USD is battling with our 2nd tier uptrend line as we speak. If the currency pair can climb above April and February highs we could witness some large near-term gains as it looks to tackle the highly psychological 1.50 level. The relative strength of the Pound is reflected in the freefall of the EUR/GBP. However, we wouldn’t be surprised to see the EUR/GBP find some solid near-term support, meaning that if the GBP/USD does break out, the rally could experience some profit-taking relatively quickly. That being said, Britain only has two medium-weight economic releases on slate for this week, meaning that Cable should have little news to deflect its rise. The only development fundamentally reversing the Cable’s rally in the near-term would be a sharp downturn in U.S. equities, so keep a close eye on the S&P futures. Fundamentally, we maintain resistance of 1.4946 with additional resistances hanging at 1.4988, 1.5028, 1.5080 and 1.5121. The 1.50 level serves as a key psychological barrier while the 1.45 area acts as a psychological cushion. To the downside, we find supports of 1.4883, 1.4834, 1.4770, 1.4730 and 1.4676. The GBP/USD is currently exchanging at 1.4902.
USD/JPY
The USD/JPY is still stuck around 100 as the highly-psychological level is proving to be as difficult to overcome as investors could have anticipated. The surprisingly positive Core Machinery Orders coupled with Aso’s aggressive stimulus package is countering the recent strength in America’s economy. Therefore, the USD/JPY finds itself at an important crossroads as our uptrend line reaches an inflection point with our 3rd tier downtrend line. The importance of the moment is difficult to express since all of this year’s progress made by the USD/JPY to tackle 100 is reaching a climactic point. Will the uptrend prevail or fall under the sword of the monstrous downtrend? The continuation of the uptrend largely depends on a recovery in the U.S. economy since the carry trade is unwound. Investors will be taking a close look at corporate earnings from the U.S. while anxiously awaiting to see if the recent improvement in economic data continues. Fundamentally, we maintain our resistances of 100.28, 100.71, 101.44, 101.98, and 102.50. To the downside, we hold our supports of 99.79, 99.06, 98.16, 97.59, and 97.11. The USD/JPY is currently exchanging at 99.79.
Crude Oil
Crude futures have experienced some eye-popping volatility over the last couple sessions, fluttering between our trend lines. The indecisive movements reflect investor uncertainty concerning the economy as a whole. While investors are not willing to give up on the uptrend, the downtrend is still sitting in the driver’s seat with investors unwilling to commit above our 2nd tier downtrend line. The highly psychological $50/bbl area continues to play a lead role as prices are gravitating here. Naturally, the key driving force behind the demand structure of crude is the overall health of the U.S. economy. Energy investors are waiting to see if the recovery in U.S. equities is legitimate before extending the rally in crude beyond the present fundamental hindrances. Investors are now being bombarded by news from the supply side after OPEC stayed quiet for quite some time. Crude imports are rising considerably from Russia and Brazil, likely an aftereffect from Obama improving upon diplomatic relations with the two nations. OPEC is vocalizing its discontent over the development since a rise in imports from Russia and Brazil dilute their massive production cuts implemented over the last 6 months. The new sources of crude are placing a new downward pressure on the price and could have a noticeable impact for the time being. We wouldn’t be surprised to see a more aggressive reaction from OPEC if the trend continues with the possibility of more production cuts on the table. Despite the developments supply-wise, crude futures should still maintain a positive correlation with the S&P futures, though they may be less inclined to fully participate in any large movements to the upside. We may not have to worry about that today since the economic data disappointed analysts this morning, showing a surprising decline in PPI and Retail Sales. These numbers raise a red flag, cautioning that the recent improvement in consumer sentiment could be short-lived, placing more downward pressure on crude futures. Fundamentally, we find resistances of $50.39/bbl, $51.03/bbl, $51.59/bbl, $52.02/bbl, and $52.49/bbl. To the downside, we see supports of $49.81/bbl, $49.28/bbl, $48.87/bbl, $48.37/bbl, and $47.79/bbl. Crude futures are presently trading at $49.98/bbl.
Gold
Gold climbed back to retest the highly psychological $900/oz level as anticipated. The rally is falling short with the precious metal experiencing consolidation. Though gold managed to get past our 1st tier downtrend line, our 2nd tier isn’t far away. In our eyes, gold broke the uptrend’s back on April 2nd. Therefore, the precious metal would need to accomplish some incredible fundamental feats to reinstate the uptrend. Hence, we view the precious metal’s recent rally as a healthy retest of a critical, defeated psychological support. We wouldn’t be surprised to see the negative correlation with U.S. equities to come into full swing with the S&P futures performing well. Fundamentally we see resistances of $897.82/oz, $900.76/oz, $904.26/oz, $908.72/oz, and $913.49/oz. To the downside, we find supports of $894.46/0z, $890.64/oz, $887.21/oz, $884.10/oz, and $880.71. Gold is currently trading at $894.25/oz.
S&P
The S&P futures are reversing course premarket on Tuesday after the U.S. released disappointing PPI and Retail Sales data points. The PPI numbers show the collapse in consumption resulting from the economic downturn is taking its toll on producer prices. As a result, the fear of deflation is creeping back into the picture, signaling the improvement in PPI over the past two months may have just been a head-fake. The Retail Sales numbers send the same signal, which raises concern that the concept of an economic recovery as a whole may be a head-fake. However, this is all speculation until we receive further confirmation from future data releases. The negative economic data is overshadowing better than expected earnings from Goldman Sachs and the fact both Citigroup and Bank of America logged considerable gains yesterday. Nevertheless, the S&P’s rally is falling short of February highs, implying the uptrend has its work cut out for it over the near-term. We wouldn’t be surprised to see the S&P futures dip back below our 3rd tier downtrend line today. The S&P’s correlations all reflect uncertainty among investors. The rally has been exceptional, but investors still have a voice in the back of their minds questioning whether the economic recovery is legitimate after several well-renowned economists disputed analyst claims of a turnaround. Therefore, investors may wait until the earnings season unfolds and the government releases its results from the stress tests of financials before making any more serious additional commitments in either direction. The S&P futures have surely made impressive strides to the upside by breaking through all of our foreseeable near-term downtrend lines. Therefore, if the futures can manage to weather the storm and hold above our 3rd tier downtrend line, the argument for the upside will be all stronger. Furthermore, if the S&P futures can break through February highs we could witness accelerated gains in the near-term. Fundamentally, we find supports of 839.75, 834.75, 829.5, 825, and 818.5. To the topside, we see resistances of 845.25, 850.5, 856.25, 862.5, and 869.25. The S&P futures are currently trading at 842.75.
30 Year
The 30 Year T-Bond futures are perking up pre-market on Tuesday after America’s economic data disappointed. As a result, the 30 Year futures are flexing their negative correlation with U.S. equities. Though the 30 Year futures have bounced from our 1st tier downtrend line, they haven’t made any game-changing moves to awaken from the depths of their present downtrend. The lack of follow through to the upside paints a distorted picture. On one hand, we could be witnessing insufficient demand in the bond market to compensate for the massive supply of treasuries created to fund the government’s stimulus measures despite the Fed’s use of quantitative easing. On the other hand, the 30 Year’s reluctance to the upside bolsters the argument for a recovery in U.S. equities, and consequently America’s economy. With a lack of evidence it’s difficult to commit to one argument or the other, showing the 30 Year futures may be a lagging indicator right now. That being said, the 30 Year futures should continue their positive correlation with U.S. equities while remaining in a negative stance. Fundamentally, we hold our resistances of 127.28, 127.64, 127.89, and 128.31 with fresh top-end of 128.73. To the downside, we find supports of 127.04 126.69, 126.45, 126.19, and 125.91. The 30 Year T-Bond futures are presently trading at 127 05.5.
Disclaimer: FastBrokers' market commentary is provided for information purposes only and under no circumstances should be regarded neither 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 property of Fast Trading services, LLC and unless otherwise indicated, any unauthorized 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.
