EUR/USD
The EUR/USD rallied earlier today, resulting in some consolidation following the large selloff. The strength in the EUR/USD came in reaction to better than expected consumer sentiment data in both Germany and the EU as a whole. However, the rally is losing steam already as the currency pair gives into U.S. equities. Earnings are flooding the U.S. market before the bell, and the results are negative for the most part. Therefore, it seems the positive consumer sentiment numbers won’t be game changing for the EUR/USD. Investors are more focused on future ECB policy with public discord among its members. Additionally, if U.S. equities lose their footing, investors will likely attach the EUR/USD to the S&P futures since investors believe whatever happens in the U.S. will bleed over into the EU economy due to tight economic coupling. The EUR/USD has already dropped through some key fundamental safety nets. The currency pair is turning its back on the highly psychological 1.30 level, a large victory for the downtrend. However, as we described in our previous posts, the EUR/USD has some solid supports built up from the condensed trading ranges between February and March. Therefore, even if the near-term selloff should continue, there should be intense battlegrounds from 1.25-1.28. The EUR/USD has found support in our previous 1st tier uptrend line and we created a new 1st tier to show the next uptrend cushion. We maintain our negative stance on the EUR/USD for the time being since the S&P futures look like they have more room to give to the downside. However, the EUR/USD could experience relative strength if U.S. equities proceed to selloff due to the better expected consumer sentiment data. Fundamentally, we maintain our supports of 1.2919, 1.2876, 1.2833, and 1.2800 with fresh bottom-end of 1.2756. To the topside, our 1.2953 support turns resistance while we hold our resistances of 1.3017, 1.3050, 1.3091, and 1.3126. The 1.30 area still serves as a psychological barrier with 1.25 becoming a key psychological cushion. The EUR/USD is currently exchanging at 1.2927.
GBP/USD
The Cable’s intraday rally is fading with U.S. corporate earnings disappointing investors. The positive correlation with U.S. equities is back in action so the S&P futures should be watched closely. The Cable is experiencing a little strength since Britain’s CPI came in line with analyst expectations. However, although the CPI number met expectations, it was not positive by any accounts. Britain’s CPI has dipped below 3% for the first time since May 2008 and the trend is clearly downward sloping. Dropping consumer prices raises the fear of inflation, which has been picking up in the U.S. and EU as well. Declining prices erode the profit margins, and ultimately result in higher unemployment if the prices fall to a level that significantly impacts sustainability of a particular company. Today’s earnings report from Tesco, Europe’s second largest retailer, reflects the toll declining consumption and lower prices are having on companies. Tesco released its weakest earnings in 15 years, and confirmed the use of lower prices in an effort to attract cash-strapped consumers. Today’s events take the wind out of the Cable’s sails, contradicting the recovery in economic data we saw earlier this month. However, as with the EUR/USD, the GBP/USD has several foreseeable uptrend supports to the downside, making the path lower layered with obstacles. Although the Cable dipped below our 2nd tier uptrend line, the currency pair is battling back above as we speak. The more significant fundamental development made yesterday was a decline below the psychological 1.45 level. Even though the GBP/USD recovered quickly, the level has been breached, setting the plate for another near-term selloff. Our 1st tier downtrend line and 2nd tier uptrend line will reach an inflection point soon, meaning we could see high volatility throughout the rest of the week. Investors will be eager to see Britain’s Claimant Count Change release tomorrow. Fundamentally, we maintain 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 hold supports of 1.4532, 1.4478, 1.4438, 1.4391, and 1.4362. The GBP/USD is currently exchanging at 1.4555.
USD/JPY
The USD/JPY has slid below our 1st tier uptrend line as 100 slowly fades into the distance. The USD/JPY will need to rebound soon if it wants to hold onto the uptrend, or the currency pair may bow to its deadly downtrend due to its complacency. A decisive move could come in the next 24 hours with Japan releasing its Trade Balance amid a sea of earnings from U.S. corporations. The long-awaited battle with 100 has surely been drawn out, and we wouldn’t be surprised to see volatility spring to life any day now. That being said, the uptrend is holding on by a thread, reflecting the fragility of the moment. The USD/JPY should ultimately succumb to its positive correlation with U.S. equities. Investors may return to the Yen as a safe haven if a second wave of the economic crisis hits the shores of America. The fundamentals of the S&P futures aren’t encouraging as far its uptrend is concerned, meaning that a return to the downtrend for the USD/JPY could be imminent. Fundamentally, we hold our resistances of 99.06, 99.79, 100.28, 100.71, and 101.44. To the downside, we maintain our supports of 98.16, 97.59, 97.11, 96.33, and 95.55. The USD/JPY is currently exchanging at 98.10.
Crude Oil
Crude continued its steep selloff yesterday before finding comfort at January 21 lows, managing to catch itself just above the psychological $45/bbl mark. The decline of the Crude futures has been instant yet draining, washing past all of the key fundamentals. Our uptrend lines were swept away, along with previous April lows. Crude has made an obvious statement concerning its downtrend preferential. We’ll keep our trend lines on our chart again to give you a picture of just how significant this selloff is. Surprisingly, the downturn has lacked meaningful volume, the one encouraging sign for the bulls. Disappointing earnings from U.S. corporate bell weather sure aren’t helping the uptrend’s cause as investors worry about global energy demand as production and consumption wilt. The rapid deterioration of the Crude futures signals the worst for U.S. equities. While Crude might experience some relative calm if a storm hits equities in the near-term, the two should remain positively correlated. Fundamentally, we find resistances of $46.07/bbl, $46.58/bbl, $46.94/bbl, $47.41/bbl, and $47.89/bbl. To the downside, we see supports of $45.64/bbl, $45.33/bbl, $44.87/bbl, $44.40/bbl, and $44.02/bbl. Crude futures are presently trading at $45.24/bbl.
Gold
Despite our previous assessment of gold’s near-term uptrend being broken, the precious metal is making a serious argument for the upside with a rapid deterioration occurring in U.S. equities. Gold is flexing its negative correlation with the S&P futures as investors run to staple safe havens. The test will be April 13 highs and the highly psychological $900/oz level. If gold can manage to climb comfortably above these barriers, we could see the rally pick up speed in the near-term. A large movement to the upside backed by large volume would make the uptrend argument more convincing. Meanwhile, gold’s strength indicates further weakness in U.S. equities, and if the precious metal should leap out of resistances, this movement could coincide with a brisk selloff in the S&P futures. Therefore, keep a close eye on the S&P futures if you decide to dabble in gold. Fundamentally we find resistances of $894.37/oz, $897.24/oz, $900.41/oz, $904.45/oz, and $909.06/oz. To the downside, we see supports of $890.64/oz, $887.21/oz, $884.54/oz, $880.71/oz, and $877.70/oz. Gold is currently trading at $892.85/oz.
S&P
The S&P futures have really taken a turn for the worst due to the combination of the realization of nationalization combined with disappointing earnings from corporate bell weathers. The words ‘credit crisis’ are re-entering headlines sans the word ‘solution’. The futures are struggling with our 2nd tier downtrend line as investors search the market for positives. Though it’s safe to say the uptrend isn’t lost with April 8 lows and 800 intact, the S&P is certainly flirting with dangerous territory. The most disconcerting development in the earnings season would have to be the uncomfortable rise in non-performing loans on bank balance sheets. Rising unemployment coupled with a lower consumption rate is taking its toll on the revenues of small businesses and large corporations alike. Furthermore, the foreclosure rate returned to the spotlight last month, meaning capital concerns could return to financials. BAC, C, and WFC took crisis like hits yesterday and the negative momentum is carrying over into Tuesday’s session of C and BAC both off by over 5% at the open. The S&P’s correlations tell the story with crude falling like a rock. The Cable and EUR/USD have made their respective declines while USD/JPY’s uptrend hangs on by a thread. Additionally, gold and the 30 Year Treasury futures have made substantial gains even though they have not made any game-changing moves trend-wise. Therefore, the S&P futures have hit a noteworthy stumbling block and how they perform over the rest of the week will be telling for the uptrend. Unfortunately, for those betting on an economic turnaround, the celebratory wine has turned sour and we are looking at a negative stance for the near-term. Whether the U.S. government can wave its magic wand again to repair equities is unknown. The trend of equities will likely come down to how investors digest the results from the much-anticipated stress tests. The U.S. won’t release any noteworthy data until tomorrow’s Home Price Index. Fundamentally, we find supports of 825.50, 819.25, 813.50, 804.50, and 799.25. To the topside, we see resistances of 829.50, 834.75, 840.25, 844.75, and 853. The S&P futures are currently trading at 827.75.
30 Year
The 30 Year T-Bond futures are finally logging some notable gains in the face of declining equities. Hence, we could be witnessing the negative correlation with equities coming back into play. However, the downtrend is still in control, and it will be difficult to convince us otherwise unless the futures should eclipse both our 2nd tier downtrend line and April 15 highs. On an encouraging note, April lows were well above March lows, setting the stage for an uptrend. Hence, we’ll need to keep a close eye on the 30 Year futures to see if they can leap some key fundamental barriers should the selloff in U.S. equities boil. Even if the S&P futures do crumble from present levels, considerable downward pressure on price from the oversupply of Treasuries could cap gains in the 30 Year. Skepticism swept aside, we will take a wait and see approach as far as committing to an uptrend is concerned. Fundamentally, we find resistances of 127.70, 128.20, 128.55, 128.83, and 129.20. To the downside, we see supports of 127.28, 127.05, 126.75, 126.42, and 126. The 30 Year T-Bond futures are presently trading at 127 10.5.
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 rallied earlier today, resulting in some consolidation following the large selloff. The strength in the EUR/USD came in reaction to better than expected consumer sentiment data in both Germany and the EU as a whole. However, the rally is losing steam already as the currency pair gives into U.S. equities. Earnings are flooding the U.S. market before the bell, and the results are negative for the most part. Therefore, it seems the positive consumer sentiment numbers won’t be game changing for the EUR/USD. Investors are more focused on future ECB policy with public discord among its members. Additionally, if U.S. equities lose their footing, investors will likely attach the EUR/USD to the S&P futures since investors believe whatever happens in the U.S. will bleed over into the EU economy due to tight economic coupling. The EUR/USD has already dropped through some key fundamental safety nets. The currency pair is turning its back on the highly psychological 1.30 level, a large victory for the downtrend. However, as we described in our previous posts, the EUR/USD has some solid supports built up from the condensed trading ranges between February and March. Therefore, even if the near-term selloff should continue, there should be intense battlegrounds from 1.25-1.28. The EUR/USD has found support in our previous 1st tier uptrend line and we created a new 1st tier to show the next uptrend cushion. We maintain our negative stance on the EUR/USD for the time being since the S&P futures look like they have more room to give to the downside. However, the EUR/USD could experience relative strength if U.S. equities proceed to selloff due to the better expected consumer sentiment data. Fundamentally, we maintain our supports of 1.2919, 1.2876, 1.2833, and 1.2800 with fresh bottom-end of 1.2756. To the topside, our 1.2953 support turns resistance while we hold our resistances of 1.3017, 1.3050, 1.3091, and 1.3126. The 1.30 area still serves as a psychological barrier with 1.25 becoming a key psychological cushion. The EUR/USD is currently exchanging at 1.2927.
GBP/USD
The Cable’s intraday rally is fading with U.S. corporate earnings disappointing investors. The positive correlation with U.S. equities is back in action so the S&P futures should be watched closely. The Cable is experiencing a little strength since Britain’s CPI came in line with analyst expectations. However, although the CPI number met expectations, it was not positive by any accounts. Britain’s CPI has dipped below 3% for the first time since May 2008 and the trend is clearly downward sloping. Dropping consumer prices raises the fear of inflation, which has been picking up in the U.S. and EU as well. Declining prices erode the profit margins, and ultimately result in higher unemployment if the prices fall to a level that significantly impacts sustainability of a particular company. Today’s earnings report from Tesco, Europe’s second largest retailer, reflects the toll declining consumption and lower prices are having on companies. Tesco released its weakest earnings in 15 years, and confirmed the use of lower prices in an effort to attract cash-strapped consumers. Today’s events take the wind out of the Cable’s sails, contradicting the recovery in economic data we saw earlier this month. However, as with the EUR/USD, the GBP/USD has several foreseeable uptrend supports to the downside, making the path lower layered with obstacles. Although the Cable dipped below our 2nd tier uptrend line, the currency pair is battling back above as we speak. The more significant fundamental development made yesterday was a decline below the psychological 1.45 level. Even though the GBP/USD recovered quickly, the level has been breached, setting the plate for another near-term selloff. Our 1st tier downtrend line and 2nd tier uptrend line will reach an inflection point soon, meaning we could see high volatility throughout the rest of the week. Investors will be eager to see Britain’s Claimant Count Change release tomorrow. Fundamentally, we maintain 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 hold supports of 1.4532, 1.4478, 1.4438, 1.4391, and 1.4362. The GBP/USD is currently exchanging at 1.4555.
USD/JPY
The USD/JPY has slid below our 1st tier uptrend line as 100 slowly fades into the distance. The USD/JPY will need to rebound soon if it wants to hold onto the uptrend, or the currency pair may bow to its deadly downtrend due to its complacency. A decisive move could come in the next 24 hours with Japan releasing its Trade Balance amid a sea of earnings from U.S. corporations. The long-awaited battle with 100 has surely been drawn out, and we wouldn’t be surprised to see volatility spring to life any day now. That being said, the uptrend is holding on by a thread, reflecting the fragility of the moment. The USD/JPY should ultimately succumb to its positive correlation with U.S. equities. Investors may return to the Yen as a safe haven if a second wave of the economic crisis hits the shores of America. The fundamentals of the S&P futures aren’t encouraging as far its uptrend is concerned, meaning that a return to the downtrend for the USD/JPY could be imminent. Fundamentally, we hold our resistances of 99.06, 99.79, 100.28, 100.71, and 101.44. To the downside, we maintain our supports of 98.16, 97.59, 97.11, 96.33, and 95.55. The USD/JPY is currently exchanging at 98.10.
Crude Oil
Crude continued its steep selloff yesterday before finding comfort at January 21 lows, managing to catch itself just above the psychological $45/bbl mark. The decline of the Crude futures has been instant yet draining, washing past all of the key fundamentals. Our uptrend lines were swept away, along with previous April lows. Crude has made an obvious statement concerning its downtrend preferential. We’ll keep our trend lines on our chart again to give you a picture of just how significant this selloff is. Surprisingly, the downturn has lacked meaningful volume, the one encouraging sign for the bulls. Disappointing earnings from U.S. corporate bell weather sure aren’t helping the uptrend’s cause as investors worry about global energy demand as production and consumption wilt. The rapid deterioration of the Crude futures signals the worst for U.S. equities. While Crude might experience some relative calm if a storm hits equities in the near-term, the two should remain positively correlated. Fundamentally, we find resistances of $46.07/bbl, $46.58/bbl, $46.94/bbl, $47.41/bbl, and $47.89/bbl. To the downside, we see supports of $45.64/bbl, $45.33/bbl, $44.87/bbl, $44.40/bbl, and $44.02/bbl. Crude futures are presently trading at $45.24/bbl.
Gold
Despite our previous assessment of gold’s near-term uptrend being broken, the precious metal is making a serious argument for the upside with a rapid deterioration occurring in U.S. equities. Gold is flexing its negative correlation with the S&P futures as investors run to staple safe havens. The test will be April 13 highs and the highly psychological $900/oz level. If gold can manage to climb comfortably above these barriers, we could see the rally pick up speed in the near-term. A large movement to the upside backed by large volume would make the uptrend argument more convincing. Meanwhile, gold’s strength indicates further weakness in U.S. equities, and if the precious metal should leap out of resistances, this movement could coincide with a brisk selloff in the S&P futures. Therefore, keep a close eye on the S&P futures if you decide to dabble in gold. Fundamentally we find resistances of $894.37/oz, $897.24/oz, $900.41/oz, $904.45/oz, and $909.06/oz. To the downside, we see supports of $890.64/oz, $887.21/oz, $884.54/oz, $880.71/oz, and $877.70/oz. Gold is currently trading at $892.85/oz.
S&P
The S&P futures have really taken a turn for the worst due to the combination of the realization of nationalization combined with disappointing earnings from corporate bell weathers. The words ‘credit crisis’ are re-entering headlines sans the word ‘solution’. The futures are struggling with our 2nd tier downtrend line as investors search the market for positives. Though it’s safe to say the uptrend isn’t lost with April 8 lows and 800 intact, the S&P is certainly flirting with dangerous territory. The most disconcerting development in the earnings season would have to be the uncomfortable rise in non-performing loans on bank balance sheets. Rising unemployment coupled with a lower consumption rate is taking its toll on the revenues of small businesses and large corporations alike. Furthermore, the foreclosure rate returned to the spotlight last month, meaning capital concerns could return to financials. BAC, C, and WFC took crisis like hits yesterday and the negative momentum is carrying over into Tuesday’s session of C and BAC both off by over 5% at the open. The S&P’s correlations tell the story with crude falling like a rock. The Cable and EUR/USD have made their respective declines while USD/JPY’s uptrend hangs on by a thread. Additionally, gold and the 30 Year Treasury futures have made substantial gains even though they have not made any game-changing moves trend-wise. Therefore, the S&P futures have hit a noteworthy stumbling block and how they perform over the rest of the week will be telling for the uptrend. Unfortunately, for those betting on an economic turnaround, the celebratory wine has turned sour and we are looking at a negative stance for the near-term. Whether the U.S. government can wave its magic wand again to repair equities is unknown. The trend of equities will likely come down to how investors digest the results from the much-anticipated stress tests. The U.S. won’t release any noteworthy data until tomorrow’s Home Price Index. Fundamentally, we find supports of 825.50, 819.25, 813.50, 804.50, and 799.25. To the topside, we see resistances of 829.50, 834.75, 840.25, 844.75, and 853. The S&P futures are currently trading at 827.75.
30 Year
The 30 Year T-Bond futures are finally logging some notable gains in the face of declining equities. Hence, we could be witnessing the negative correlation with equities coming back into play. However, the downtrend is still in control, and it will be difficult to convince us otherwise unless the futures should eclipse both our 2nd tier downtrend line and April 15 highs. On an encouraging note, April lows were well above March lows, setting the stage for an uptrend. Hence, we’ll need to keep a close eye on the 30 Year futures to see if they can leap some key fundamental barriers should the selloff in U.S. equities boil. Even if the S&P futures do crumble from present levels, considerable downward pressure on price from the oversupply of Treasuries could cap gains in the 30 Year. Skepticism swept aside, we will take a wait and see approach as far as committing to an uptrend is concerned. Fundamentally, we find resistances of 127.70, 128.20, 128.55, 128.83, and 129.20. To the downside, we see supports of 127.28, 127.05, 126.75, 126.42, and 126. The 30 Year T-Bond futures are presently trading at 127 10.5.
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.
