EUR/USD
The EUR/USD is finally finding that stabilization we were anticipating with the EUR/GBP leaping on oversold conditions. Despite all of the uncertainty swirling in the FX community concerning the ECB’s future monetary policy, the EU’s CPI data met analyst predictions while Industrial Production declined slightly less than expected. Therefore, investors finally have some positive news to feed off of in a fairly quiet week news-wise for the EU. The EUR/USD is righting itself just above April lows, preventing a heightened selloff for the time being. However, there is little evidence to support the argument for a lasting recovery in the currency pair. The EUR/USD is still trading below our 1st tier uptrend line with inflection points on the way. Speaking of inflection points, the pending collision of our 1st and 2nd tier uptrend and downtrend lines should yield significant volatility. Therefore, we could experience a breakup of the consolidation taking place. Despite the encouraging data surfacing from the EU today, the investor uncertainty surrounding the ECB’s future monetary policy is clearly placing downward pressure on the EUR/USD. If the currency pair should fall beneath April lows we could see the selloff pickup pace towards the highly psychological 1.30 area. Fundamentally, we maintain our supports of 1.3192, 1.3162, and 1.3126 with fresh supports of 1.3091 and 1.3050. To the topside, our 1.3223 and 1.3271 supports turn resistance while we hold our resistances of 1.3323, 1.3351, and 1.3375. The 1.35 area acts as a psychological barrier with 1.30 serving as a key psychological cushion. The EUR/USD is currently exchanging at 1.3195.
GBP/USD
The Cable has come well-off its highs on relatively light volume in what we view as healthy profit taking. As expected, the Cable is having some trouble leaving behind the highly psychological 1.50 level. The weakness of the Pound is reflected in the EUR/GBP finally finding a bottom. The present downturn in the GBP/USD was triggered by no discernable news/data, which leads us to our conclusion of fundamental profit-taking. Although the Cable has dipped below our 2nd tier uptrend line and April 6 highs in the process, the currency pair managed to stabilize above April 15 lows. As a result, a return to the topside could come quickly. Hence, we maintain our positive stance on the GBP/USD until further notice. Britain won’t release any economic data of significance this week, meaning the GBP/USD should follow a positive correlation with U.S. equities while maintaining relative strength due to Britain’s upbeat data over the past month. Fundamentally, our 1.4946 and 1.4988 supports turn resistance while we maintain our resistances of 1.5028, 1.5080, and 1.5121. The 1.50 level remains a key psychological barrier while 1.45 serves as a psychological cushion. To the downside, we maintain our supports of 1.4883, 1.4834 and 1.4770 with fresh supports of 1.4730 and 1.4655. The GBP/USD is currently exchanging at 1.4889.
USD/JPY
The USD/JPY continued its slight selloff despite a late session rally in U.S. equities. We still don’t feel the present pullback in the USD/JPY is backbreaking, yet. The currency pair has our 2nd tier uptrend line to rely on for the time being. However, as we stated before, the uptrend is extremely young compared to the downtrend, giving the downside precedence. On the other hand, everybody knew the crucial 100 level would be a tedious obstacle to overcome. We continue to witness a battle of the economies. The Japanese economy deteriorated to such a point that the Yen lost its luster as a safe haven. Then again, the Dollar has joined the party via quantitative easing, resulting in overall weakness against other major Dollar pairs and in succession stalling a possible breakout in the USD/JPY. Regardless, the USD/JPY should yield to its positive correlation with U.S. equities should the S&P futures have a breakout of their own past February highs. The economic data from the U.S. is mixed while Japanese data remains highly negative for the most part. Therefore, there are more than enough reasons to believe the uptrend in the USD/JPY can hold itself together. On the other hand, we’ve still got those three downtrend lines bearing down on price. Fundamentally, our 99.79 support turns resistance while we maintain our resistances of 100.28, 100.71, 101.44, and 101.98. To the downside, we hold our supports of 99.06, 98.16, 97.59, and 97.11 with fresh bottom-end of 96.33. The USD/JPY is currently exchanging at 98.99.
Crude Oil
Crude futures continue to drag along our 1st tier uptrend line as investors debate trends and whether to leave $50/bbl in the past. It seems investors could reach a decision soon with our 1st and 2nd tier uptrend and downtrend lines reaching their respective inflection points. We notice the same pattern of inflection in the EUR/USD, meaning the markets could get very volatile at the end of the week. The data from the U.S. over the past 48 hours continues to send mixed signals regarding the state of the American economy. The confusion is reflected in crude futures with investors unsure whether to bank on a recovery. However, it feels as if game changing news will come soon with the crude futures growing tired of consolidation. Weekly Crude Oil Inventories came in uncomfortably above expectations yesterday. In fact, the number was eye-popping and it’s shocking the crude futures held up so well. The startling rise in inventories makes us wary of overall consumer sentiment. On the other hand, the boost in supply could be due to the exponential increase in crude imports from Brazil and Russia. Either way, the resilience in the futures further exemplifies the fact that investors are holding onto the belief that an economic recovery is underway. We expect crude futures to continue their strong positive correlation with U.S. equities for the time being. Fundamentally, we maintain our resistances of $50.39/bbl, $51.03/bbl, $51.59/bbl, $52.02/bbl, and $52.49/bbl. To the downside, we hold our supports of $49.81/bbl, $49.28/bbl, $48.87/bbl, $48.37/bbl, and $47.79/bbl. Crude futures are presently trading at $50.29/bbl.
Gold
Not much has changed in gold as it trades sideways between our 1st and 2nd tier downtrend lines. The precious metal has given us no reason to alter our negative stance and gold certainly has its hands full with the psychological $900/oz and our 2nd tier downtrend line. We anticipate gold to gravitate towards its natural negative correlation with U.S. equities during critical moments. Hence, the precious metal is still hinting at another breakout in the S&P futures with the back of the uptrend broken. However, there is always the possibility of gold jolting back into its uptrend should U.S. equities collapse. On the other hand, the precious metal could head lower with equities should deflation worries escalate. In other words, gold’s behavioral correlation with U.S. equities could prove unpredictable should the waters boil. One thing we can tell you, gold has certainly made a commitment to the downtrend with its rapid decline from 4/2-4/6. Fundamentally our $894.46 support turns resistance while we hold our resistances of $897.82/oz, $900.76/oz, $904.26/oz, and $908.72/oz. To the downside, we maintain our supports of $890.64/oz, $887.21/oz, $884.10/oz, and $880.71 with fresh bottom-end of $877.70/oz. Gold is currently trading at $890.10/oz.
S&P
The S&P futures are consolidating with the battle heating up between the bulls and the bears. We continue to receive mixed data from the U.S., preventing investors from committing fully to the concept of an economic recovery. The theme at present is improvement in manufacturing coupled with a collapsing housing market while producer and consumer prices trend downwards. Although analysts predict the true economic recovery will begin with a turnaround in housing, the fact that all of the data coming from the U.S. isn’t overwhelmingly negative is a relief. The positive that really sticks out from our screen is the upturn in weekly Unemployment Claims. Although any number over 600k is horrible to say the least, an improvement is welcomed. However, the negatives swirling around the bulls are preventing U.S. equities from skyrocketing. Therefore, if the consolidation lasts for much longer, the S&P futures run the risk of losing their upward momentum. Conversely, the longer the futures consolidate, the further away our 3rd tier downtrend drifts. Our correlations are signaling a game-changing move approaching, particularly crude futures and the EUR/USD. Both investment vehicles will be experiencing multiple inflection points soon, implying a return to high volatility. We’ve seen volume pick up in the S&P futures over the past couple sessions, so we would not be surprised to see a large move in the coming days. We maintain our positive outlook on the S&P futures trend wise unless the collapse below our 2nd and 3rd tier downtrend lines. Additionally, the futures still have the highly psychological 800 level on their side. Fundamentally, we find supports of 845.25, 839.75, 834.75, 829.5, and 825. To the topside, we see resistances of 850.5, 856.25, 867.75, and 871.5. The S&P futures are currently trading at 850.50.
30 Year
The 30 Year T-Bond futures are topping out again despite a lack of significant movement from U.S. equities. The 30 Year is obeying its downtrend, and its decline could be a cause for concern if there isn’t a counterbalancing rally in the S&P futures. We still haven’t seen that follow through to the upside in either the 30 or 10 Year futures after March’s furious rally. Therefore, even though the Fed has already purchased over $50 Billion worth of government debt, the level of quantitative easing combined with normal investor purchase of debt may not be sufficient to counter to the massive supply required for America’s economic stimulus package. The movement, or lack thereof, in the 30 Year futures is certainly discouraging, and could soon ignite fear that the amount of quantitative easing may need to be increased. That being said, the 30 Year futures are clearly locked into their downtrend and would need a large reversal to the upside to alter their path. Fundamentally, we find resistances of 127.28, 127.64, 127.89, 128.31, and 128.73. To the downside, we hold our supports of 127.04 126.69, 126.27, and 125.90 with fresh bottom-end of 125.5. The 30 Year T-Bond futures are presently trading at 127 02.5.
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.
The EUR/USD is finally finding that stabilization we were anticipating with the EUR/GBP leaping on oversold conditions. Despite all of the uncertainty swirling in the FX community concerning the ECB’s future monetary policy, the EU’s CPI data met analyst predictions while Industrial Production declined slightly less than expected. Therefore, investors finally have some positive news to feed off of in a fairly quiet week news-wise for the EU. The EUR/USD is righting itself just above April lows, preventing a heightened selloff for the time being. However, there is little evidence to support the argument for a lasting recovery in the currency pair. The EUR/USD is still trading below our 1st tier uptrend line with inflection points on the way. Speaking of inflection points, the pending collision of our 1st and 2nd tier uptrend and downtrend lines should yield significant volatility. Therefore, we could experience a breakup of the consolidation taking place. Despite the encouraging data surfacing from the EU today, the investor uncertainty surrounding the ECB’s future monetary policy is clearly placing downward pressure on the EUR/USD. If the currency pair should fall beneath April lows we could see the selloff pickup pace towards the highly psychological 1.30 area. Fundamentally, we maintain our supports of 1.3192, 1.3162, and 1.3126 with fresh supports of 1.3091 and 1.3050. To the topside, our 1.3223 and 1.3271 supports turn resistance while we hold our resistances of 1.3323, 1.3351, and 1.3375. The 1.35 area acts as a psychological barrier with 1.30 serving as a key psychological cushion. The EUR/USD is currently exchanging at 1.3195.
GBP/USD
The Cable has come well-off its highs on relatively light volume in what we view as healthy profit taking. As expected, the Cable is having some trouble leaving behind the highly psychological 1.50 level. The weakness of the Pound is reflected in the EUR/GBP finally finding a bottom. The present downturn in the GBP/USD was triggered by no discernable news/data, which leads us to our conclusion of fundamental profit-taking. Although the Cable has dipped below our 2nd tier uptrend line and April 6 highs in the process, the currency pair managed to stabilize above April 15 lows. As a result, a return to the topside could come quickly. Hence, we maintain our positive stance on the GBP/USD until further notice. Britain won’t release any economic data of significance this week, meaning the GBP/USD should follow a positive correlation with U.S. equities while maintaining relative strength due to Britain’s upbeat data over the past month. Fundamentally, our 1.4946 and 1.4988 supports turn resistance while we maintain our resistances of 1.5028, 1.5080, and 1.5121. The 1.50 level remains a key psychological barrier while 1.45 serves as a psychological cushion. To the downside, we maintain our supports of 1.4883, 1.4834 and 1.4770 with fresh supports of 1.4730 and 1.4655. The GBP/USD is currently exchanging at 1.4889.
USD/JPY
The USD/JPY continued its slight selloff despite a late session rally in U.S. equities. We still don’t feel the present pullback in the USD/JPY is backbreaking, yet. The currency pair has our 2nd tier uptrend line to rely on for the time being. However, as we stated before, the uptrend is extremely young compared to the downtrend, giving the downside precedence. On the other hand, everybody knew the crucial 100 level would be a tedious obstacle to overcome. We continue to witness a battle of the economies. The Japanese economy deteriorated to such a point that the Yen lost its luster as a safe haven. Then again, the Dollar has joined the party via quantitative easing, resulting in overall weakness against other major Dollar pairs and in succession stalling a possible breakout in the USD/JPY. Regardless, the USD/JPY should yield to its positive correlation with U.S. equities should the S&P futures have a breakout of their own past February highs. The economic data from the U.S. is mixed while Japanese data remains highly negative for the most part. Therefore, there are more than enough reasons to believe the uptrend in the USD/JPY can hold itself together. On the other hand, we’ve still got those three downtrend lines bearing down on price. Fundamentally, our 99.79 support turns resistance while we maintain our resistances of 100.28, 100.71, 101.44, and 101.98. To the downside, we hold our supports of 99.06, 98.16, 97.59, and 97.11 with fresh bottom-end of 96.33. The USD/JPY is currently exchanging at 98.99.
Crude Oil
Crude futures continue to drag along our 1st tier uptrend line as investors debate trends and whether to leave $50/bbl in the past. It seems investors could reach a decision soon with our 1st and 2nd tier uptrend and downtrend lines reaching their respective inflection points. We notice the same pattern of inflection in the EUR/USD, meaning the markets could get very volatile at the end of the week. The data from the U.S. over the past 48 hours continues to send mixed signals regarding the state of the American economy. The confusion is reflected in crude futures with investors unsure whether to bank on a recovery. However, it feels as if game changing news will come soon with the crude futures growing tired of consolidation. Weekly Crude Oil Inventories came in uncomfortably above expectations yesterday. In fact, the number was eye-popping and it’s shocking the crude futures held up so well. The startling rise in inventories makes us wary of overall consumer sentiment. On the other hand, the boost in supply could be due to the exponential increase in crude imports from Brazil and Russia. Either way, the resilience in the futures further exemplifies the fact that investors are holding onto the belief that an economic recovery is underway. We expect crude futures to continue their strong positive correlation with U.S. equities for the time being. Fundamentally, we maintain our resistances of $50.39/bbl, $51.03/bbl, $51.59/bbl, $52.02/bbl, and $52.49/bbl. To the downside, we hold our supports of $49.81/bbl, $49.28/bbl, $48.87/bbl, $48.37/bbl, and $47.79/bbl. Crude futures are presently trading at $50.29/bbl.
Gold
Not much has changed in gold as it trades sideways between our 1st and 2nd tier downtrend lines. The precious metal has given us no reason to alter our negative stance and gold certainly has its hands full with the psychological $900/oz and our 2nd tier downtrend line. We anticipate gold to gravitate towards its natural negative correlation with U.S. equities during critical moments. Hence, the precious metal is still hinting at another breakout in the S&P futures with the back of the uptrend broken. However, there is always the possibility of gold jolting back into its uptrend should U.S. equities collapse. On the other hand, the precious metal could head lower with equities should deflation worries escalate. In other words, gold’s behavioral correlation with U.S. equities could prove unpredictable should the waters boil. One thing we can tell you, gold has certainly made a commitment to the downtrend with its rapid decline from 4/2-4/6. Fundamentally our $894.46 support turns resistance while we hold our resistances of $897.82/oz, $900.76/oz, $904.26/oz, and $908.72/oz. To the downside, we maintain our supports of $890.64/oz, $887.21/oz, $884.10/oz, and $880.71 with fresh bottom-end of $877.70/oz. Gold is currently trading at $890.10/oz.
S&P
The S&P futures are consolidating with the battle heating up between the bulls and the bears. We continue to receive mixed data from the U.S., preventing investors from committing fully to the concept of an economic recovery. The theme at present is improvement in manufacturing coupled with a collapsing housing market while producer and consumer prices trend downwards. Although analysts predict the true economic recovery will begin with a turnaround in housing, the fact that all of the data coming from the U.S. isn’t overwhelmingly negative is a relief. The positive that really sticks out from our screen is the upturn in weekly Unemployment Claims. Although any number over 600k is horrible to say the least, an improvement is welcomed. However, the negatives swirling around the bulls are preventing U.S. equities from skyrocketing. Therefore, if the consolidation lasts for much longer, the S&P futures run the risk of losing their upward momentum. Conversely, the longer the futures consolidate, the further away our 3rd tier downtrend drifts. Our correlations are signaling a game-changing move approaching, particularly crude futures and the EUR/USD. Both investment vehicles will be experiencing multiple inflection points soon, implying a return to high volatility. We’ve seen volume pick up in the S&P futures over the past couple sessions, so we would not be surprised to see a large move in the coming days. We maintain our positive outlook on the S&P futures trend wise unless the collapse below our 2nd and 3rd tier downtrend lines. Additionally, the futures still have the highly psychological 800 level on their side. Fundamentally, we find supports of 845.25, 839.75, 834.75, 829.5, and 825. To the topside, we see resistances of 850.5, 856.25, 867.75, and 871.5. The S&P futures are currently trading at 850.50.
30 Year
The 30 Year T-Bond futures are topping out again despite a lack of significant movement from U.S. equities. The 30 Year is obeying its downtrend, and its decline could be a cause for concern if there isn’t a counterbalancing rally in the S&P futures. We still haven’t seen that follow through to the upside in either the 30 or 10 Year futures after March’s furious rally. Therefore, even though the Fed has already purchased over $50 Billion worth of government debt, the level of quantitative easing combined with normal investor purchase of debt may not be sufficient to counter to the massive supply required for America’s economic stimulus package. The movement, or lack thereof, in the 30 Year futures is certainly discouraging, and could soon ignite fear that the amount of quantitative easing may need to be increased. That being said, the 30 Year futures are clearly locked into their downtrend and would need a large reversal to the upside to alter their path. Fundamentally, we find resistances of 127.28, 127.64, 127.89, 128.31, and 128.73. To the downside, we hold our supports of 127.04 126.69, 126.27, and 125.90 with fresh bottom-end of 125.5. The 30 Year T-Bond futures are presently trading at 127 02.5.
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.
