EUR/USD
The EUR/USD has put on an incredible rally the last 24 hours, surging past 4/10 lows to our 1st tier downtrend line. The EUR/USD surpassing the highly psychological 1.30 level and our 3rd tier uptrend line on Thursday was a clear instigating force in sending the currency pair higher. Yesterday’s better than expected services and manufacturing PMI data combined with today’s optimistic German Ifo Business Climate reading are giving the Euro incredible strength. All of these data points relay a message that the overall outlook of business managers is improving in the EU. However, what remains to be seen is whether the upturn in these significant data sets materializes into a real uptrend, or merely a bounce in a downtrend. Only time will tell. At least the EUR/USD bulls have something to cheer about now. The relative strength of the Euro is exemplified by a breakout in the EUR/GBP as it made a psychological move of its own by shooting above .90. Despite its impressive run, the EUR/USD is ducking back below our 1st tier downtrend line as investors react to Durable Goods Orders from the U.S. We remain cautiously optimistic as we must remember the ECB has been vague concerning its future monetary policy, creating a lot of uncertainty among the investment world. Caution aside, the EUR/USD has made some encouraging progress to the topside. The next set of challenges will be climbing above 4/09 highs and our 2nd and 3rd downtrend lines. Fundamentally, we find supports of 1.3211, 1.3178, 1.3143, 1.3109, and 1.1.3068. To the topside, we see resistances of 1.3269, 1.3297, 1.3335, 1.3379, and 1.3411. 1.30 becomes a key psychological cushion while 1.35 serves as a psychological barrier. The EUR/USD is currently exchanging at 1.3237.
GBP/USD
The Cable is recovering from earlier losses in reaction to a worse than expected Prelim GDP release from Britain. The Prelim GDP number shows the British economy is indeed in worse shape than anticipated as the nation’s production gets punished for its heavy reliance on financial services. Moody’s highlighted the dismal situation by warning Britain’s AAA credit rating may be in jeopardy due to the nation’s unprecedented over-reliance on debt to keep its economy afloat. A loss of its AAA rating would raise the interest payments Britain must pay on its debt, only increasing the overall burden on the economy. Bad news aside, the Cable is reacting in a more positive manner than one would anticipate after such negative developments. The GBP/USD is finding strength in better than expected business climate data from the EU and durable goods orders out of the U.S. The Cable has bounced off our 2nd tier trend line and could realize some substantial gains should it brave above yesterday’s high. The resilience of the GBP/USD is highly reliant on the performance of U.S. equities to counter the bad news from Britain. With the S&P futures flirting with the possibility of another breakout, the Cable may be inclined to participate due to the positive correlation. Fundamentally, we find resistances of 1.4730, 1.4773, 1.4826, 1.4864, and 1.4904. To the downside, we see supports of 1.4677, 1.4612, 1.4567, 1.4532, and 1.4481. 1.45 serves as a psychological cushion with 1.50 acting as a key psychological barrier. The GBP/USD is currently exchanging at 1.4687.
USD/JPY
The USD/JPY has declined below our 1st tier downtrend line and is flirting with very dangerous territory. Its recent downturn could indicate that a large selloff is pending. However, the USD/JPY’s deterioration is puzzling since the EUR/USD and GBP/USD are breaking out while the S&P futures play with the idea of a brighter future as well. This development in the USD/JPY is mysterious since the currency pair has been positively correlated with all of these other investment vehicles throughout the crisis. Could the present performance of the USD/JPY be hinting at an overall depreciation in the Dollar as analysts have forewarned? Since we haven’t seen any game-changing news from Japan over the past 24 hours and the U.S. reported stronger than expected Durable Goods Orders, our speculation is certainly plausible. However, we would have to witness a clear follow through in order to make a more convincing argument. The USD/JPY could simply be giving investors a head fake before it turns higher. Fundamentally, we find resistances of 97.98, 98.56, 99.20, 99.79, and 100.28. To the downside, we see supports of 97.11, 96.33, 95.55, 95.04, and 94.48. The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion. The USD/JPY is currently exchanging at 97.04.
Crude Oil
Crude futures have catapulted past our downtrend line and the highly psychological $50/bbl after U.S. Durable Goods Orders came in better than analyst expectations. Crude has overcome two crucial barriers in one sling swoop, but are backing away from our 1st tier downtrend line right now. Despite the hesitation, crude futures have made a clear statement to the topside, and we wouldn’t be surprised to see more large near-term gains. After all, we know just how volatile crude can get. Encouragingly, the present performance of crude could be indicating a breakout in the S&P futures due to their positive correlation. Furthermore, a breakout in the S&P futures above our 3rd tier downtrend line would only fuel the upward momentum in crude. Finally, the resurgence of crude comes despite two straight weeks of very discouraging inventory levels. Hence, crude futures have some real energy behind them and only need an extra push from external economic factors to really take off. A recovery in durable goods implies stabilization in automobile sales, which consequently implies a rise in demand for oil. Additionally, the strong performance in the EUR/USD in reaction to better than expected production and services PMI data shows the global demand for crude is recovering. If the crude futures should rise above our 1st tier uptrend line the next barrier would be our new 2nd tier downtrend line. Fundamentally, we find supports of $51.02/bbl, $50.70/bbl, $50.21/bbl, $49.70/bbl, and $49.26/bbl. To the topside, we see resistances of $51.47/bbl, $51.89/bbl, $52.36/bbl, $52.85/bbl, and $53.35/bbl. $50/bbl turns becomes a key psychological cushion while $55/bbl serves as a psychological barrier once more. Crude is presently trading at $51.20/bbl.
Gold
Gold did take off after getting above the key $900/oz level after a report that China has increased its gold reserves by 76% since 2003. However, gold’s run has topped out after Durable Goods Orders beat analyst expectations this morning. The S&P futures are poised to breakout, meaning the precious metal could quickly return a lot of its recent gains. Additionally, we wouldn’t be surprised to see gold retrace to $900/oz simply due to the psychological significance of the level. Furthermore, the release from China’s Xinhua news agency regarding the nation’s gold reserves is a bit vague. Saying China has increased its reserves of gold by 76% since 2003 doesn’t necessarily mean the buildup has happened recently. We’re talking about a six year period in which China’s overall reserves skyrocketed. Is China really diversifying from the Dollar, or is the government playing mind games by stating a figure spread over six years? One can never be sure. However, we opt for the mind games explanation. Either way, China is sending a clear message it plans on diversifying from the Dollar in the present and future, which is likely why gold is experiencing so much strength from the news. Regardless, gold’s commitment to $900/oz.+ future is a big move and investors should take notice. If the precious metal can close above our 3rd tier uptrend line on the 4-hour we could see more large near-term gains. Fundamentally we find resistances of $909.66/oz, $913.47/oz, $916.16/oz, $919.54/oz, and $922.69/oz. To the downside, we see supports of $907.64/oz, $905.85/oz, $903.83/oz, $900.41/oz, and $898.15/oz. Gold is currently trading at $907.65/oz.
S&P
The S&P futures are strengthening after better than expected Durable Goods Orders and New Home Sales data releases. Additionally, numbers from the EU over the past two days are pointing towards a pickup in business activity in the European region. All of the news is creating yet another faceoff with our 3rd tier downtrend line, which is proving to be quite a challenge this month. However, if the S&P futures can brave to close above the 3rd tier on our 4-hour, then we could see large near term gains. Despite the upbeat data releases, investors may wait until the Treasury releases the stress test details later in the trading session before deciding whether to commit fully to the upside. Huge gains in crude and the EUR/USD combined with a large pullback in the 30 Year futures are indicating a breakout in the S&P futures is likely. However, the present breakout out gold and a drift downwards by the USD/JPY are making bulls second guess the optimism. After all, only yesterday we saw disappointing Existing Home Sales and weekly Unemployment Claims data. Therefore, it’s easy to understand why the bulls are guarded. On a positive note, we have made it through most of the earnings season without a complete collapse in equities. Therefore, investors could be showing the worst has been priced in for now with huge gains taking place in technology, the sector usually leading stocks out of a downturn. We have a positive outlook for the S&P futures for the time being. We placed a new near-term uptrend line on our chart to give investors idea of where the critical defense lies. Fundamentally, we find resistance of 860.75 with 2nd tier and top end waiting at 866.25 and 872.75, respectively. We don’t find any other near-term resistances, always a positive sign. To the downside, we see supports of 853, 846.5, 840.25, and 833.5. The S&P futures are currently trading at 857.00.
30 Year
The 30 Year T-Bond futures are trading sharply lower after both U.S. Durable Goods Orders and New Home Sales beat analyst expectations. The upbeat data is pointing towards a contrasting breakout in the S&P futures as treasuries and equities exercise their negative correlation. If the S&P futures do manage to shoot above our 3rd tier downtrend line we could witness a corresponding retest of March lows by the 30 Year T-Bond futures. Any movement beneath these lows could result in an intense selloff. Therefore, the uptrend of the 30 Year futures is holding on for dear life even though the downtrend staked its claim long ago. Our 2nd and 3rd tier downtrend lines are fading into the distance while the possibility actually reaching our 1st tier suddenly doesn’t seem out of the question. We would be surprised to see a pickup in volume as markets close out the week on upbeat data, not good news to those long the 30 Year futures. We maintain our negative stance due to the aforementioned reasons. Fundamentally, we find supports of 124.36, 124.03, 123.69, and 123.34. To the topside, we see resistances of 124.78, 125.19, 125.53, 125.81, and 126.20. The 30 Year futures are presently trading at 124 13.0.
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 put on an incredible rally the last 24 hours, surging past 4/10 lows to our 1st tier downtrend line. The EUR/USD surpassing the highly psychological 1.30 level and our 3rd tier uptrend line on Thursday was a clear instigating force in sending the currency pair higher. Yesterday’s better than expected services and manufacturing PMI data combined with today’s optimistic German Ifo Business Climate reading are giving the Euro incredible strength. All of these data points relay a message that the overall outlook of business managers is improving in the EU. However, what remains to be seen is whether the upturn in these significant data sets materializes into a real uptrend, or merely a bounce in a downtrend. Only time will tell. At least the EUR/USD bulls have something to cheer about now. The relative strength of the Euro is exemplified by a breakout in the EUR/GBP as it made a psychological move of its own by shooting above .90. Despite its impressive run, the EUR/USD is ducking back below our 1st tier downtrend line as investors react to Durable Goods Orders from the U.S. We remain cautiously optimistic as we must remember the ECB has been vague concerning its future monetary policy, creating a lot of uncertainty among the investment world. Caution aside, the EUR/USD has made some encouraging progress to the topside. The next set of challenges will be climbing above 4/09 highs and our 2nd and 3rd downtrend lines. Fundamentally, we find supports of 1.3211, 1.3178, 1.3143, 1.3109, and 1.1.3068. To the topside, we see resistances of 1.3269, 1.3297, 1.3335, 1.3379, and 1.3411. 1.30 becomes a key psychological cushion while 1.35 serves as a psychological barrier. The EUR/USD is currently exchanging at 1.3237.
GBP/USD
The Cable is recovering from earlier losses in reaction to a worse than expected Prelim GDP release from Britain. The Prelim GDP number shows the British economy is indeed in worse shape than anticipated as the nation’s production gets punished for its heavy reliance on financial services. Moody’s highlighted the dismal situation by warning Britain’s AAA credit rating may be in jeopardy due to the nation’s unprecedented over-reliance on debt to keep its economy afloat. A loss of its AAA rating would raise the interest payments Britain must pay on its debt, only increasing the overall burden on the economy. Bad news aside, the Cable is reacting in a more positive manner than one would anticipate after such negative developments. The GBP/USD is finding strength in better than expected business climate data from the EU and durable goods orders out of the U.S. The Cable has bounced off our 2nd tier trend line and could realize some substantial gains should it brave above yesterday’s high. The resilience of the GBP/USD is highly reliant on the performance of U.S. equities to counter the bad news from Britain. With the S&P futures flirting with the possibility of another breakout, the Cable may be inclined to participate due to the positive correlation. Fundamentally, we find resistances of 1.4730, 1.4773, 1.4826, 1.4864, and 1.4904. To the downside, we see supports of 1.4677, 1.4612, 1.4567, 1.4532, and 1.4481. 1.45 serves as a psychological cushion with 1.50 acting as a key psychological barrier. The GBP/USD is currently exchanging at 1.4687.
USD/JPY
The USD/JPY has declined below our 1st tier downtrend line and is flirting with very dangerous territory. Its recent downturn could indicate that a large selloff is pending. However, the USD/JPY’s deterioration is puzzling since the EUR/USD and GBP/USD are breaking out while the S&P futures play with the idea of a brighter future as well. This development in the USD/JPY is mysterious since the currency pair has been positively correlated with all of these other investment vehicles throughout the crisis. Could the present performance of the USD/JPY be hinting at an overall depreciation in the Dollar as analysts have forewarned? Since we haven’t seen any game-changing news from Japan over the past 24 hours and the U.S. reported stronger than expected Durable Goods Orders, our speculation is certainly plausible. However, we would have to witness a clear follow through in order to make a more convincing argument. The USD/JPY could simply be giving investors a head fake before it turns higher. Fundamentally, we find resistances of 97.98, 98.56, 99.20, 99.79, and 100.28. To the downside, we see supports of 97.11, 96.33, 95.55, 95.04, and 94.48. The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion. The USD/JPY is currently exchanging at 97.04.
Crude Oil
Crude futures have catapulted past our downtrend line and the highly psychological $50/bbl after U.S. Durable Goods Orders came in better than analyst expectations. Crude has overcome two crucial barriers in one sling swoop, but are backing away from our 1st tier downtrend line right now. Despite the hesitation, crude futures have made a clear statement to the topside, and we wouldn’t be surprised to see more large near-term gains. After all, we know just how volatile crude can get. Encouragingly, the present performance of crude could be indicating a breakout in the S&P futures due to their positive correlation. Furthermore, a breakout in the S&P futures above our 3rd tier downtrend line would only fuel the upward momentum in crude. Finally, the resurgence of crude comes despite two straight weeks of very discouraging inventory levels. Hence, crude futures have some real energy behind them and only need an extra push from external economic factors to really take off. A recovery in durable goods implies stabilization in automobile sales, which consequently implies a rise in demand for oil. Additionally, the strong performance in the EUR/USD in reaction to better than expected production and services PMI data shows the global demand for crude is recovering. If the crude futures should rise above our 1st tier uptrend line the next barrier would be our new 2nd tier downtrend line. Fundamentally, we find supports of $51.02/bbl, $50.70/bbl, $50.21/bbl, $49.70/bbl, and $49.26/bbl. To the topside, we see resistances of $51.47/bbl, $51.89/bbl, $52.36/bbl, $52.85/bbl, and $53.35/bbl. $50/bbl turns becomes a key psychological cushion while $55/bbl serves as a psychological barrier once more. Crude is presently trading at $51.20/bbl.
Gold
Gold did take off after getting above the key $900/oz level after a report that China has increased its gold reserves by 76% since 2003. However, gold’s run has topped out after Durable Goods Orders beat analyst expectations this morning. The S&P futures are poised to breakout, meaning the precious metal could quickly return a lot of its recent gains. Additionally, we wouldn’t be surprised to see gold retrace to $900/oz simply due to the psychological significance of the level. Furthermore, the release from China’s Xinhua news agency regarding the nation’s gold reserves is a bit vague. Saying China has increased its reserves of gold by 76% since 2003 doesn’t necessarily mean the buildup has happened recently. We’re talking about a six year period in which China’s overall reserves skyrocketed. Is China really diversifying from the Dollar, or is the government playing mind games by stating a figure spread over six years? One can never be sure. However, we opt for the mind games explanation. Either way, China is sending a clear message it plans on diversifying from the Dollar in the present and future, which is likely why gold is experiencing so much strength from the news. Regardless, gold’s commitment to $900/oz.+ future is a big move and investors should take notice. If the precious metal can close above our 3rd tier uptrend line on the 4-hour we could see more large near-term gains. Fundamentally we find resistances of $909.66/oz, $913.47/oz, $916.16/oz, $919.54/oz, and $922.69/oz. To the downside, we see supports of $907.64/oz, $905.85/oz, $903.83/oz, $900.41/oz, and $898.15/oz. Gold is currently trading at $907.65/oz.
S&P
The S&P futures are strengthening after better than expected Durable Goods Orders and New Home Sales data releases. Additionally, numbers from the EU over the past two days are pointing towards a pickup in business activity in the European region. All of the news is creating yet another faceoff with our 3rd tier downtrend line, which is proving to be quite a challenge this month. However, if the S&P futures can brave to close above the 3rd tier on our 4-hour, then we could see large near term gains. Despite the upbeat data releases, investors may wait until the Treasury releases the stress test details later in the trading session before deciding whether to commit fully to the upside. Huge gains in crude and the EUR/USD combined with a large pullback in the 30 Year futures are indicating a breakout in the S&P futures is likely. However, the present breakout out gold and a drift downwards by the USD/JPY are making bulls second guess the optimism. After all, only yesterday we saw disappointing Existing Home Sales and weekly Unemployment Claims data. Therefore, it’s easy to understand why the bulls are guarded. On a positive note, we have made it through most of the earnings season without a complete collapse in equities. Therefore, investors could be showing the worst has been priced in for now with huge gains taking place in technology, the sector usually leading stocks out of a downturn. We have a positive outlook for the S&P futures for the time being. We placed a new near-term uptrend line on our chart to give investors idea of where the critical defense lies. Fundamentally, we find resistance of 860.75 with 2nd tier and top end waiting at 866.25 and 872.75, respectively. We don’t find any other near-term resistances, always a positive sign. To the downside, we see supports of 853, 846.5, 840.25, and 833.5. The S&P futures are currently trading at 857.00.
30 Year
The 30 Year T-Bond futures are trading sharply lower after both U.S. Durable Goods Orders and New Home Sales beat analyst expectations. The upbeat data is pointing towards a contrasting breakout in the S&P futures as treasuries and equities exercise their negative correlation. If the S&P futures do manage to shoot above our 3rd tier downtrend line we could witness a corresponding retest of March lows by the 30 Year T-Bond futures. Any movement beneath these lows could result in an intense selloff. Therefore, the uptrend of the 30 Year futures is holding on for dear life even though the downtrend staked its claim long ago. Our 2nd and 3rd tier downtrend lines are fading into the distance while the possibility actually reaching our 1st tier suddenly doesn’t seem out of the question. We would be surprised to see a pickup in volume as markets close out the week on upbeat data, not good news to those long the 30 Year futures. We maintain our negative stance due to the aforementioned reasons. Fundamentally, we find supports of 124.36, 124.03, 123.69, and 123.34. To the topside, we see resistances of 124.78, 125.19, 125.53, 125.81, and 126.20. The 30 Year futures are presently trading at 124 13.0.
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.
