EUR/USD
The EUR/USD has really deteriorated since Friday after falling below previous April lows. The EUR/USD fell into a rapid decline from here, and is presently trading back below the highly psychological 1.30 level. Though 1.30 has been broken, we wouldn’t be surprised to see some support around this area as investors take advantage of oversold conditions and hesitate leaving 1.30 behind. Serious damage has been inflicted upon the Euro in reaction to dissent among the ECB. The ECB continues to send mixed messages regarding its future monetary policy and the uncertainty is killing the EUR/USD. Investors need a unified central back in the face of the global economic crisis. Discontent among the ECB raises debate concerning whether a benchmark rate below 1% is in the not so distant future. Though the EU has shown signs of improvement in economic data, economists agree the global economy remains in a fragile state. If a second wave of crisis should hit, the EU could find itself exposed again to faltering Eastern European economies. Adding to the downward pressure in the EUR/USD is another positive earnings report from a major U.S. financial, Bank of America. The weakness in the EU economy relative to the present strength in America’s is appreciating the Dollar across the board. On a more speculative front, we should consider what the EUR/USD’s freefall implies about U.S. equities. Since the two have been positive correlating through the economic crisis, does the EUR/USD’s plunge indicate an approaching selloff in the S&P futures? On an encouraging note for the EUR/USD, the currency pair has a ton of solid support to rely upon after building up a solid base from February through March. Therefore, although the near-term fundamentals are negative, the EUR/USD has some considerable assistance to the downside to keep the overall uptrend intact. We adjusted our 1st tier uptrend line to give investors a picture of where the force of the uptrend comes into play next. Fundamentally, we find supports of 1.2953, 1.2919, 1.2876, 1.2833, and 1.2800. To the topside, we see resistances of 1.3017, 1.3050, 1.3091, 1.3126, and 1.3162. The 1.30 area still serves as a psychological cushion but could turn into a barrier shortly. The EUR/USD is currently exchanging at 1.2967.
GBP/USD
The Cable is getting clobbered after the CBI stated Britain’s economic growth could be worse than forecasted. Furthermore, the CBI is urging its Chancellor not to commit more funds to economic stimulus and quantitative easing in the upcoming budget. While one would like to believe the ease of quantitative easing would have a positive impact on the Pound, the opposite is occurring. The Cable’s contraction in response to the news shows investors believe the CBI’s reluctance to encourage further use of liquidity to fight the economic downturn could do more harm than good to Britain’s economy. With the BOE’s benchmark rate hovering near zero, the CBI is proposing taking away the only tool left to ease credit markets. On the other hand, the CBI’s decision could be a sign of confidence that the worst of the economic crisis has been realized. Like the EUR/USD, the GBP/USD’s uptrend has several foreseeable uptrend lines to prevent a real correction back into its long-term downtrend. Furthermore, despite a pop in the EUR/GBP, the currency pair still has considerable forces in place towards the downside. Therefore, the Cable has quite a few fundamental and correlative pieces helping out the bulls. However, the GBP/USD sent a strong message by falling below our 3rd tier uptrend line and more near-term losses could be realized. The big question will be whether the recent improvement in Britain’s economic data can continue. Britain will return to the forefront on Tuesday with the release of CPI and RPI. Fundamentally, we find resistances of 1.4579, 1.4612, 1.4677, 1.4730, and 1.4770. The 1.50 level remains a key psychological barrier while 1.45 serves as a psychological cushion. To the downside, we see supports of 1.4532, 1.4478, 1.4438, 1.4391, and 1.4362. The GBP/USD is currently exchanging at 1.4573.
USD/JPY
The Yen is strengthening slightly against the Dollar again, but the USD/JPY is presently finding strength in our 1st tier uptrend line. Weakness in the USD/JPY reflects the selloff taking place on Wall Street premarket Monday morning. With the bad news from Japan out of the way, the focus turns towards U.S. equities and corporate earnings, so the USD/JPY should exhibit a positive correlation with the S&P futures for the time being. As we stated previously, the USD/JPY’s uptrend is young and fragile. Therefore, the uptrend lines for the currency pair to fall back on are few in number. Hence, despite the Dollar’s recent strength and attack at 100, the uptrend could easily crack should U.S. equities falter. We’ve got multiple downtrend lines bearing down on price. Therefore, if the USD/JPY should drop below our 1st tier uptrend and downtrend lines, we could witness a sharp, near-term correction. On the opposite side of the coin, life remains in the uptrend and a continuation of a path to the upside is certainly possible. Keep a close eye on this currency as volatility could pick up, particularly to the downside. 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, 97.59, 97.11, 96.33, and 95.55. The USD/JPY is currently exchanging at 98.46.
Crude Oil
Crude is experiencing an incredible selloff after our 1st tier downtrend lines reached an inflection point on Friday. The contraction comes with the S&P futures posting significant losses after the U.S. Government quietly made a move towards the nationalization of major U.S. banks. Additionally, the Euro and Pound are experiencing collapses of their own, showing international demand for Crude could continue to decline. Crude’s movement is significant despite the light volume. Crude futures have managed to crumble below our point of no return 1st tier uptrend line and April lows in the process. The only silver lining we find is that buyers could enter the fray to take advantage of what could be viewed as oversold conditions. Furthermore, the futures could find strength along 1/20-1/23 and 2/2-2/5 lows. The EU and Britain will return to the forefront Tuesday with the release of fresh significant economic data. If tomorrow’s data comes in below expectations while U.S. corporate earnings paint a bleak picture for consumption, the selloff could pick up momentum even from present levels. However, we wouldn’t be surprised to see some consolidation in the near-term due to the size of the selloff taking place. We’ll keep our previous trend lines on today’s chart to give you an idea of the significance of today’s movement. The uptrend has been seriously comprised and it’s safe to say the medium-term downtrend is back in action. Fundamentally, we find resistances of $46.58/bbl, $46.94/bbl, $47.41/bbl, $47.89/bbl, and $48.22/bbl. To the downside, we find supports of $46.07/bbl, $45.64/bbl, $45.33/bbl, $44.87/bbl, and $44.40/bbl. Crude futures are presently trading at $46.28/bbl.
Gold
Gold’s downtrend picked up speed Friday, collapsing below April lows, a fairly significant move fundamentally. The move came with subpar gains in U.S. equities, showing Gold is following the Dollar more closely than equities correlation wise. The EUR/USD and GBP/USD made negative fundamental moves over the past two sessions as well, showing there is a real change of tide taking place. However, gold sent its message earlier this month, so further declines in the precious metal aren’t a surprise. We really had to stretch back to create new uptrend lines, signifying the power of the downtrend right now. That being said, the new uptrend lines should carry some weight as far as support is concerned. We minimized our chart to give you a better picture of where the trends stand. Though the pop to the upside taking place right now, we maintain a negative stance on gold with the near-term uptrend’s back broken. Fundamentally we find resistances of $880.71/oz, $884.54/oz, $887.21/oz, $890.64/oz, and $894.37/oz. To the downside, we see supports of $880.71/oz, $877.70/oz, $873.44/oz, $869.80/oz, and $866.62/oz. Gold is currently trading at $877.45/oz.
S&P
The S&P futures are experiencing a brisk selloff despite BofA earnings coming in far above analyst expectations. The weakness comes as the U.S. government hints that it will likely convert its preferred shares in banks to common shares as opposed to asking Congress for more funding. In effect, the government will have a controlling stake in several banks, meaning they could finally be giving into nationalization. The reality of nationalization is hitting equities hard, and implies that the capital ratios of some banks undergoing ‘stress tests’ are questionable. The news sets off a domino effect, making investors question the results of the ‘stress tests’, raising uncertainty and placing large downward pressure on equities. Furthermore, earnings season is heating up and investors are worried the results from many corporations will be negatively impacted from the financial crisis. The markets are waking up from a very quiet week and we could see volatility rise. The deflection of the S&P futures from our 3rd tier downtrend line could end up being a critical turning point with the futures failing to climb above February highs. The significance of the selloff taking place in equities is reflected by the today’s huge downturn in crude. Crude futures are collapsing, reigniting fears that a second wave of the economic crisis is approaching. Also, the EUR/USD and GBP/USD have logged significant losses over the past two sessions. These movements are proving to be forewarning considering the positive correlation with U.S. equities. If the USD/JPY should follow suit, currencies will be sending a resounding negative message. Before we get too far ahead of ourselves, the S&P futures still have key defenses to the downside, particularly April 8 lows and the highly psychological 800 level. Furthermore, the futures should find some support in our 1st and 2nd tier downtrend lines. The U.S. won’t release any significant economic data until Thursday’s weekly Unemployment Claims. Therefore, focus will be on corporate earnings and EU/British economic data over the next few sessions. Fundamentally, we find supports of 834.75, 829.50, 825, 819.25, and 813. To the topside, we see resistances of 840.25, 844.75, 850.50, 856.25, and 862.5. The S&P futures are currently trading at 837.50.
30 Year
The 30 Year T-Bond futures are recovering from Friday’s large selloff that saw new April lows. The strength in the 30 Year futures comes in reaction to the large selloff taking place on Wall Street today. However, despite the present pop in the 30 Year futures, they have been exhibiting clear behavior of a downtrend. Both near-term and medium-term downtrends are in play, as displayed by our 2nd and 3rd tier downtrend lines. Despite the inherent negativity, the 30 Year futures still have February and March lows to fall back on. Therefore, a major selloff should be avoided as long as these lows remain intact. We’re keeping the massive rally of March 18 in the back of our minds. We were expecting a follow through to the upside, but it hasn’t materialized yet. The downtrend taking control despite the use of quantitative easing raises a red flag concerning the demand at Treasury auctions. The use of quantitative easing is unprecedented in the U.S., so we expect odd behavior from the 30 Year and 10 Year futures over the medium-term. Therefore, the overall correlation with equities isn’t very reliable. However, the recent performance of the 30 Year futures could be displaying a forewarning message as far as the health of the U.S. economy is concerned. 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 has really deteriorated since Friday after falling below previous April lows. The EUR/USD fell into a rapid decline from here, and is presently trading back below the highly psychological 1.30 level. Though 1.30 has been broken, we wouldn’t be surprised to see some support around this area as investors take advantage of oversold conditions and hesitate leaving 1.30 behind. Serious damage has been inflicted upon the Euro in reaction to dissent among the ECB. The ECB continues to send mixed messages regarding its future monetary policy and the uncertainty is killing the EUR/USD. Investors need a unified central back in the face of the global economic crisis. Discontent among the ECB raises debate concerning whether a benchmark rate below 1% is in the not so distant future. Though the EU has shown signs of improvement in economic data, economists agree the global economy remains in a fragile state. If a second wave of crisis should hit, the EU could find itself exposed again to faltering Eastern European economies. Adding to the downward pressure in the EUR/USD is another positive earnings report from a major U.S. financial, Bank of America. The weakness in the EU economy relative to the present strength in America’s is appreciating the Dollar across the board. On a more speculative front, we should consider what the EUR/USD’s freefall implies about U.S. equities. Since the two have been positive correlating through the economic crisis, does the EUR/USD’s plunge indicate an approaching selloff in the S&P futures? On an encouraging note for the EUR/USD, the currency pair has a ton of solid support to rely upon after building up a solid base from February through March. Therefore, although the near-term fundamentals are negative, the EUR/USD has some considerable assistance to the downside to keep the overall uptrend intact. We adjusted our 1st tier uptrend line to give investors a picture of where the force of the uptrend comes into play next. Fundamentally, we find supports of 1.2953, 1.2919, 1.2876, 1.2833, and 1.2800. To the topside, we see resistances of 1.3017, 1.3050, 1.3091, 1.3126, and 1.3162. The 1.30 area still serves as a psychological cushion but could turn into a barrier shortly. The EUR/USD is currently exchanging at 1.2967.
GBP/USD
The Cable is getting clobbered after the CBI stated Britain’s economic growth could be worse than forecasted. Furthermore, the CBI is urging its Chancellor not to commit more funds to economic stimulus and quantitative easing in the upcoming budget. While one would like to believe the ease of quantitative easing would have a positive impact on the Pound, the opposite is occurring. The Cable’s contraction in response to the news shows investors believe the CBI’s reluctance to encourage further use of liquidity to fight the economic downturn could do more harm than good to Britain’s economy. With the BOE’s benchmark rate hovering near zero, the CBI is proposing taking away the only tool left to ease credit markets. On the other hand, the CBI’s decision could be a sign of confidence that the worst of the economic crisis has been realized. Like the EUR/USD, the GBP/USD’s uptrend has several foreseeable uptrend lines to prevent a real correction back into its long-term downtrend. Furthermore, despite a pop in the EUR/GBP, the currency pair still has considerable forces in place towards the downside. Therefore, the Cable has quite a few fundamental and correlative pieces helping out the bulls. However, the GBP/USD sent a strong message by falling below our 3rd tier uptrend line and more near-term losses could be realized. The big question will be whether the recent improvement in Britain’s economic data can continue. Britain will return to the forefront on Tuesday with the release of CPI and RPI. Fundamentally, we find resistances of 1.4579, 1.4612, 1.4677, 1.4730, and 1.4770. The 1.50 level remains a key psychological barrier while 1.45 serves as a psychological cushion. To the downside, we see supports of 1.4532, 1.4478, 1.4438, 1.4391, and 1.4362. The GBP/USD is currently exchanging at 1.4573.
USD/JPY
The Yen is strengthening slightly against the Dollar again, but the USD/JPY is presently finding strength in our 1st tier uptrend line. Weakness in the USD/JPY reflects the selloff taking place on Wall Street premarket Monday morning. With the bad news from Japan out of the way, the focus turns towards U.S. equities and corporate earnings, so the USD/JPY should exhibit a positive correlation with the S&P futures for the time being. As we stated previously, the USD/JPY’s uptrend is young and fragile. Therefore, the uptrend lines for the currency pair to fall back on are few in number. Hence, despite the Dollar’s recent strength and attack at 100, the uptrend could easily crack should U.S. equities falter. We’ve got multiple downtrend lines bearing down on price. Therefore, if the USD/JPY should drop below our 1st tier uptrend and downtrend lines, we could witness a sharp, near-term correction. On the opposite side of the coin, life remains in the uptrend and a continuation of a path to the upside is certainly possible. Keep a close eye on this currency as volatility could pick up, particularly to the downside. 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, 97.59, 97.11, 96.33, and 95.55. The USD/JPY is currently exchanging at 98.46.
Crude Oil
Crude is experiencing an incredible selloff after our 1st tier downtrend lines reached an inflection point on Friday. The contraction comes with the S&P futures posting significant losses after the U.S. Government quietly made a move towards the nationalization of major U.S. banks. Additionally, the Euro and Pound are experiencing collapses of their own, showing international demand for Crude could continue to decline. Crude’s movement is significant despite the light volume. Crude futures have managed to crumble below our point of no return 1st tier uptrend line and April lows in the process. The only silver lining we find is that buyers could enter the fray to take advantage of what could be viewed as oversold conditions. Furthermore, the futures could find strength along 1/20-1/23 and 2/2-2/5 lows. The EU and Britain will return to the forefront Tuesday with the release of fresh significant economic data. If tomorrow’s data comes in below expectations while U.S. corporate earnings paint a bleak picture for consumption, the selloff could pick up momentum even from present levels. However, we wouldn’t be surprised to see some consolidation in the near-term due to the size of the selloff taking place. We’ll keep our previous trend lines on today’s chart to give you an idea of the significance of today’s movement. The uptrend has been seriously comprised and it’s safe to say the medium-term downtrend is back in action. Fundamentally, we find resistances of $46.58/bbl, $46.94/bbl, $47.41/bbl, $47.89/bbl, and $48.22/bbl. To the downside, we find supports of $46.07/bbl, $45.64/bbl, $45.33/bbl, $44.87/bbl, and $44.40/bbl. Crude futures are presently trading at $46.28/bbl.
Gold
Gold’s downtrend picked up speed Friday, collapsing below April lows, a fairly significant move fundamentally. The move came with subpar gains in U.S. equities, showing Gold is following the Dollar more closely than equities correlation wise. The EUR/USD and GBP/USD made negative fundamental moves over the past two sessions as well, showing there is a real change of tide taking place. However, gold sent its message earlier this month, so further declines in the precious metal aren’t a surprise. We really had to stretch back to create new uptrend lines, signifying the power of the downtrend right now. That being said, the new uptrend lines should carry some weight as far as support is concerned. We minimized our chart to give you a better picture of where the trends stand. Though the pop to the upside taking place right now, we maintain a negative stance on gold with the near-term uptrend’s back broken. Fundamentally we find resistances of $880.71/oz, $884.54/oz, $887.21/oz, $890.64/oz, and $894.37/oz. To the downside, we see supports of $880.71/oz, $877.70/oz, $873.44/oz, $869.80/oz, and $866.62/oz. Gold is currently trading at $877.45/oz.
S&P
The S&P futures are experiencing a brisk selloff despite BofA earnings coming in far above analyst expectations. The weakness comes as the U.S. government hints that it will likely convert its preferred shares in banks to common shares as opposed to asking Congress for more funding. In effect, the government will have a controlling stake in several banks, meaning they could finally be giving into nationalization. The reality of nationalization is hitting equities hard, and implies that the capital ratios of some banks undergoing ‘stress tests’ are questionable. The news sets off a domino effect, making investors question the results of the ‘stress tests’, raising uncertainty and placing large downward pressure on equities. Furthermore, earnings season is heating up and investors are worried the results from many corporations will be negatively impacted from the financial crisis. The markets are waking up from a very quiet week and we could see volatility rise. The deflection of the S&P futures from our 3rd tier downtrend line could end up being a critical turning point with the futures failing to climb above February highs. The significance of the selloff taking place in equities is reflected by the today’s huge downturn in crude. Crude futures are collapsing, reigniting fears that a second wave of the economic crisis is approaching. Also, the EUR/USD and GBP/USD have logged significant losses over the past two sessions. These movements are proving to be forewarning considering the positive correlation with U.S. equities. If the USD/JPY should follow suit, currencies will be sending a resounding negative message. Before we get too far ahead of ourselves, the S&P futures still have key defenses to the downside, particularly April 8 lows and the highly psychological 800 level. Furthermore, the futures should find some support in our 1st and 2nd tier downtrend lines. The U.S. won’t release any significant economic data until Thursday’s weekly Unemployment Claims. Therefore, focus will be on corporate earnings and EU/British economic data over the next few sessions. Fundamentally, we find supports of 834.75, 829.50, 825, 819.25, and 813. To the topside, we see resistances of 840.25, 844.75, 850.50, 856.25, and 862.5. The S&P futures are currently trading at 837.50.
30 Year
The 30 Year T-Bond futures are recovering from Friday’s large selloff that saw new April lows. The strength in the 30 Year futures comes in reaction to the large selloff taking place on Wall Street today. However, despite the present pop in the 30 Year futures, they have been exhibiting clear behavior of a downtrend. Both near-term and medium-term downtrends are in play, as displayed by our 2nd and 3rd tier downtrend lines. Despite the inherent negativity, the 30 Year futures still have February and March lows to fall back on. Therefore, a major selloff should be avoided as long as these lows remain intact. We’re keeping the massive rally of March 18 in the back of our minds. We were expecting a follow through to the upside, but it hasn’t materialized yet. The downtrend taking control despite the use of quantitative easing raises a red flag concerning the demand at Treasury auctions. The use of quantitative easing is unprecedented in the U.S., so we expect odd behavior from the 30 Year and 10 Year futures over the medium-term. Therefore, the overall correlation with equities isn’t very reliable. However, the recent performance of the 30 Year futures could be displaying a forewarning message as far as the health of the U.S. economy is concerned. 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.
