EUR/USD
The EUR/USD tumbled yesterday, collapsing through several key supports, including the highly psychological 1.30 level. EU economic data has outperformed over the past week, making Monday’s large decline all the more worrying. The EUR/USD is presently fighting to stay above April lows in order to avoid a fundamental collapse. The outbreak of Swine Flu is hitting the Euro particularly hard as investors run towards the Dollar and Yen for cover. The currency pair should continue to follow its positive correlation with U.S. equities to a tee due to the lack of economic data from the EU. The WSJ announced that the stress tests may show C and BAC will require more capital, meaning the economic worries persist. Hence, if the S&P futures stumble under the pressure of our downtrend lines, the EUR/USD may be inclined to follow suit. We could see a battle in the 1.30 area today as investors hesitate to let the psychological level go. On the other hand, if the EUR/USD were to leave 1.30 and our 1st tier uptrend line behind, we could see the current selloff pick up speed. We have a negative stance on the EUR/USD trend-wise with the Swine Flu putting the brakes on an economic recovery. If the flu were to reach epidemic status, the EUR/USD may be forced beneath April lows.
Fundamentally, we find supports of 1.2987, 1.2949, 1.2920, 1.2892, and 1.2866. To the topside, we see resistances of 1.3044, 1.3072, 1.3123, 1.3167, and 1.3199. Although 1.30 is serving as a cushion right now, it could soon become a psychological barrier. The EUR/USD is currently exchanging at 1.2988.
GBP/USD
The Pound is finding relative strength as the Euro crumbles due to surprisingly higher than expected realized sales data. Hence, British consumer sentiment got an extraordinary boost last month, most likely due to stability in equities. The GBP/USD is reaping the benefits by hanging above the psychological 1.45 mark in the face of a Dollar run in reaction to the Swine Flu. Despite the positive consolidation in the Cable, investors should take note of the WSJ’s announcement that Citibank and BofA may require more capital. It seems problems in the financial industry could continue, exposing the GBP/USD to a possible fire sale due to Britain’s heavy reliance on financial services for economic production. Meanwhile, our 2nd tier downtrend line and 1.50 loom in the distance, mocking any near-term strength in the currency pair. On a positive note, at least we got some optimistic economic data from Britain and the Cable has held above April lows. Therefore, the ingredients for a near-term pop are in the mix. However, the performance of the GBP/USD ultimately depends on its positive correlation with U.S. equities. As a result, the outlook isn’t looking so hot as long as the S&P futures play with fire.
Fundamentally, we hold our resistances of 1.4626, 1.4677, 1.4730, 1.4773, and 1.4826. To the downside, we maintain our supports of 1.4567, 1.4532, 1.4481, 1.44437, and 1.4387. 1.45 serves as a psychological cushion with 1.50 acting as a key psychological barrier. The GBP/USD is currently exchanging at 1.4622.
USD/JPY
The USD/JPY has dropped below our previous 1st tier trend line, and this should be a great cause of concern for the bulls. We could really see the selloff pickup speed today as investors sprint towards the Dollar and Yen for safety from the Swine Flu. Our previous 1st tier uptrend line and 1st tier downtrend lines are reaching an inflection point today, creating a perfect storm for the USD/JPY. The all around strength of the Yen comes despite an extremely negative economic outlook from Japan. Japan sees industrial production and exports declining 23.4% and 27.6% in the fiscal year vs. previous estimates of 4.8% and 3.2% declines, respectively. Not to mention Japan foresees a 3.3% drop in GDP and an unemployment rate of 5.2%. To make matters worse, Japan expected the CPI to drop much more than expected with deflation taking control of prices. These are horrible numbers folks, and they show the global economic crisis may be far from over. One might expect the Dollar to appreciate on the news of the Japanese economy worsening since the currency pair is being priced on the comparative economic performance between the two nations. However, investors are showing the estimates from Japan imply the U.S. will have its fair share trouble as well. The plummeting level of exports only highlights the economic struggles of America. The downtrend seems to be in the driver’s seat right now and we have a negative outlook on the USD/JPY.
Fundamentally, we find resistances of 97.11, 97.98, 98.56, 99.20, and 99.79. To the downside, we see supports of 96.33, 95.55, 95.04, 94.48, and 93.57. The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion. The USD/JPY is currently exchanging at 96.15.
Crude Oil
Volatility climbed in Monday’s trading session as investors digested the Swine Flu news. We saw enormous price swings with traders uncertain of what side to be on. However, the downtrend took control as we anticipated with the crude futures trading comfortably below the highly psychological $50/bbl. The driving force behind crude’s negative performance is clear. The spread of Swine Flu is taking a huge bite out of international travel, resulting in less flights and lower consumption of crude. Additionally, the Swine Flu is having a negative impact on equities with investors worried that the fragile consumer will buckle under pressure, resulting in reduced consumption and production of goods. Hence, the demand side of crude is being attacked from several sides. Though the U.S. won’t release weekly inventories until tomorrow, supply is rising at an alarming pace. Hence, both the supply and demand sides are combining to deal a serious blow to the price of crude. The futures are trading back below our 2nd tier downtrend line, yet are holding firm above our new 1st tier uptrend line and April lows. Keep a close eye on the S&P futures since the performance of equities will likely be the deciding factor concerning whether crude tumbles past key fundamental supports.
Fundamentally, we maintain our supports of $48.78/bbl, $48.33/bbl, $47.86/bbl, $47.53/bbl, and $46.75/bbl. To the topside, we hold our resistances of $49.22/bbl, $49.66/bbl, $50.10/bbl, $50.44/bbl, and $51.13/bbl. $50/bbl turns becomes a key psychological barrier again while $45/bbl serves as a psychological cushion. Crude is presently trading at $48.84/bbl.
Gold
Gold has collapsed in reaction to tumbling crude futures as deflation worries come front and center. The Swine Flu outbreak is concerning investors that consumption could take a big hit with individuals opting to avoid busy areas, such as shopping malls. With recent CPI data already hinting at deflation, the Swine Flu only exacerbates the situation. Therefore, gold is declining with equities as we witnessed during the height of the economic crisis. However, any conclusion would be a premature assumption so we will we need to keep a close eye on the developing situation. Regardless, gold remains a tough read. Just when we think the precious metal has recommitted to a $900/oz+ future gold gets beaten down, placing a large question mark over trend. That being said, gold is fighting to stay above 4/21 lows, meaning the fundamentals are still in place for an uptrend. This is reinforced by the fact that our 1st and 2nd tier uptrend lines are intact. On the other hand, the downtrend holds more weight with time on its side as our 2nd and 3rd tier downtrend lines hang overhead. Hence the confusion regarding the precious metal’s trend.
Fundamentally we find resistances of $889.20/oz, $891.44/oz, $893.90/oz, $896.59/oz, and $899.05/oz. To the downside, we see supports of $885.62, $882.94/oz, $880.25/oz, $877.34/oz, and $874.66/oz. Gold is currently trading at $887.40/oz.
S&P
The S&P futures left the squeeze of our 1st tier uptrend and 3rd tier downtrend lines today, but unfortunately they moved to the downside. Market pessimism deepens in reaction to the WHO raising its warning level to 4 while the WSJ reports that both Citigroup and BofA may require more funding after the stress test results are released. The leak of the results may be hinting that the stress tests will show U.S. financials are in worse shape than we thought, and the financial institutions are making a preemptive move in an effort to avoid a massive selloff on May 4th. Keep in mind this is just speculation, we are merely trying to put the pieces together. On the positive side, the S&P futures are reacting well to our 2nd tier downtrend line with a nice pop as investors eagerly await the release of CB Consumer Confidence data. Hence, even though negative sentiment is building, the S&P futures still aren’t far away from a huge breakout towards 900. Meanwhile, our 1st tier uptrend and 3rd tier downtrend lines are crawling towards their inflection point, indicating investors may wait for Wednesday’s Prelim GDP number before making a serious commitment directionally. The Swine Flu surely adds a scary piece to the puzzle. If the flu were to reach epidemic status, an outbreak could have dire consequences for U.S. equities as the recovery in consumption grinds to a halt. However, we will have to wait and see how the situation plays out. Correlation wise, crude futures are trading all over the place, highlighting the uncertainty in the investment world. While crude is sliding downwards, the uptrend still has a glimmer of hope. The EUR/USD and GBP/USD are holding on for dear life as well. All in all, investors are holding their collect breath with so many variables hanging in the balance. First thing’s first, consumer confidence today followed by GDP and the conclusion of the Fed meeting tomorrow.
Fundamentally, our 846.5 support turns resistance while we maintain our resistances of 853, 860.75, 867 and 872.75. To the downside, we hold our supports of 840.25, 833.5, 825.25, and 820 with fresh bottom-end of 811.75. The S&P futures are currently trading at 847.75.
30 Year
The 30 Year T-Bond futures are edging higher Monday, exercising their negative correlation with U.S. equities. However, the 30 Year futures haven’t made any noteworthy fundamental moves to the upside and the downtrend remains in clear control. If the present pullback in the S&P futures were to turn into a large selloff we wouldn’t be surprised to see a corresponding rally in the 30 Year futures. Although, as we’ve witnessed since the announcement of quantitative easing, every move to the upside has failed to materialize into anything noteworthy. The 30 Year’s downside preferential reflects the huge supply of treasuries needed to fund America’s economic stimulus and recovery measures. Hence, the use of quantitative easing is not solving the problem, merely tempering volatility. On a positive note, the 30 Year futures have managed to stay above March lows, preventing a catastrophic selloff.
Fundamentally, our 125.19 resistance turns support while we maintain our supports of 124.78, 124.36, 124.03, and 123.69. To the topside, we hold our resistances of 125.53, 125.81, 126.20, and 126.67 with fresh top-end of 127.25. The 30 Year futures are presently trading at 125 17.5.
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 tumbled yesterday, collapsing through several key supports, including the highly psychological 1.30 level. EU economic data has outperformed over the past week, making Monday’s large decline all the more worrying. The EUR/USD is presently fighting to stay above April lows in order to avoid a fundamental collapse. The outbreak of Swine Flu is hitting the Euro particularly hard as investors run towards the Dollar and Yen for cover. The currency pair should continue to follow its positive correlation with U.S. equities to a tee due to the lack of economic data from the EU. The WSJ announced that the stress tests may show C and BAC will require more capital, meaning the economic worries persist. Hence, if the S&P futures stumble under the pressure of our downtrend lines, the EUR/USD may be inclined to follow suit. We could see a battle in the 1.30 area today as investors hesitate to let the psychological level go. On the other hand, if the EUR/USD were to leave 1.30 and our 1st tier uptrend line behind, we could see the current selloff pick up speed. We have a negative stance on the EUR/USD trend-wise with the Swine Flu putting the brakes on an economic recovery. If the flu were to reach epidemic status, the EUR/USD may be forced beneath April lows.
Fundamentally, we find supports of 1.2987, 1.2949, 1.2920, 1.2892, and 1.2866. To the topside, we see resistances of 1.3044, 1.3072, 1.3123, 1.3167, and 1.3199. Although 1.30 is serving as a cushion right now, it could soon become a psychological barrier. The EUR/USD is currently exchanging at 1.2988.
GBP/USD
The Pound is finding relative strength as the Euro crumbles due to surprisingly higher than expected realized sales data. Hence, British consumer sentiment got an extraordinary boost last month, most likely due to stability in equities. The GBP/USD is reaping the benefits by hanging above the psychological 1.45 mark in the face of a Dollar run in reaction to the Swine Flu. Despite the positive consolidation in the Cable, investors should take note of the WSJ’s announcement that Citibank and BofA may require more capital. It seems problems in the financial industry could continue, exposing the GBP/USD to a possible fire sale due to Britain’s heavy reliance on financial services for economic production. Meanwhile, our 2nd tier downtrend line and 1.50 loom in the distance, mocking any near-term strength in the currency pair. On a positive note, at least we got some optimistic economic data from Britain and the Cable has held above April lows. Therefore, the ingredients for a near-term pop are in the mix. However, the performance of the GBP/USD ultimately depends on its positive correlation with U.S. equities. As a result, the outlook isn’t looking so hot as long as the S&P futures play with fire.
Fundamentally, we hold our resistances of 1.4626, 1.4677, 1.4730, 1.4773, and 1.4826. To the downside, we maintain our supports of 1.4567, 1.4532, 1.4481, 1.44437, and 1.4387. 1.45 serves as a psychological cushion with 1.50 acting as a key psychological barrier. The GBP/USD is currently exchanging at 1.4622.
USD/JPY
The USD/JPY has dropped below our previous 1st tier trend line, and this should be a great cause of concern for the bulls. We could really see the selloff pickup speed today as investors sprint towards the Dollar and Yen for safety from the Swine Flu. Our previous 1st tier uptrend line and 1st tier downtrend lines are reaching an inflection point today, creating a perfect storm for the USD/JPY. The all around strength of the Yen comes despite an extremely negative economic outlook from Japan. Japan sees industrial production and exports declining 23.4% and 27.6% in the fiscal year vs. previous estimates of 4.8% and 3.2% declines, respectively. Not to mention Japan foresees a 3.3% drop in GDP and an unemployment rate of 5.2%. To make matters worse, Japan expected the CPI to drop much more than expected with deflation taking control of prices. These are horrible numbers folks, and they show the global economic crisis may be far from over. One might expect the Dollar to appreciate on the news of the Japanese economy worsening since the currency pair is being priced on the comparative economic performance between the two nations. However, investors are showing the estimates from Japan imply the U.S. will have its fair share trouble as well. The plummeting level of exports only highlights the economic struggles of America. The downtrend seems to be in the driver’s seat right now and we have a negative outlook on the USD/JPY.
Fundamentally, we find resistances of 97.11, 97.98, 98.56, 99.20, and 99.79. To the downside, we see supports of 96.33, 95.55, 95.04, 94.48, and 93.57. The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion. The USD/JPY is currently exchanging at 96.15.
Crude Oil
Volatility climbed in Monday’s trading session as investors digested the Swine Flu news. We saw enormous price swings with traders uncertain of what side to be on. However, the downtrend took control as we anticipated with the crude futures trading comfortably below the highly psychological $50/bbl. The driving force behind crude’s negative performance is clear. The spread of Swine Flu is taking a huge bite out of international travel, resulting in less flights and lower consumption of crude. Additionally, the Swine Flu is having a negative impact on equities with investors worried that the fragile consumer will buckle under pressure, resulting in reduced consumption and production of goods. Hence, the demand side of crude is being attacked from several sides. Though the U.S. won’t release weekly inventories until tomorrow, supply is rising at an alarming pace. Hence, both the supply and demand sides are combining to deal a serious blow to the price of crude. The futures are trading back below our 2nd tier downtrend line, yet are holding firm above our new 1st tier uptrend line and April lows. Keep a close eye on the S&P futures since the performance of equities will likely be the deciding factor concerning whether crude tumbles past key fundamental supports.
Fundamentally, we maintain our supports of $48.78/bbl, $48.33/bbl, $47.86/bbl, $47.53/bbl, and $46.75/bbl. To the topside, we hold our resistances of $49.22/bbl, $49.66/bbl, $50.10/bbl, $50.44/bbl, and $51.13/bbl. $50/bbl turns becomes a key psychological barrier again while $45/bbl serves as a psychological cushion. Crude is presently trading at $48.84/bbl.
Gold
Gold has collapsed in reaction to tumbling crude futures as deflation worries come front and center. The Swine Flu outbreak is concerning investors that consumption could take a big hit with individuals opting to avoid busy areas, such as shopping malls. With recent CPI data already hinting at deflation, the Swine Flu only exacerbates the situation. Therefore, gold is declining with equities as we witnessed during the height of the economic crisis. However, any conclusion would be a premature assumption so we will we need to keep a close eye on the developing situation. Regardless, gold remains a tough read. Just when we think the precious metal has recommitted to a $900/oz+ future gold gets beaten down, placing a large question mark over trend. That being said, gold is fighting to stay above 4/21 lows, meaning the fundamentals are still in place for an uptrend. This is reinforced by the fact that our 1st and 2nd tier uptrend lines are intact. On the other hand, the downtrend holds more weight with time on its side as our 2nd and 3rd tier downtrend lines hang overhead. Hence the confusion regarding the precious metal’s trend.
Fundamentally we find resistances of $889.20/oz, $891.44/oz, $893.90/oz, $896.59/oz, and $899.05/oz. To the downside, we see supports of $885.62, $882.94/oz, $880.25/oz, $877.34/oz, and $874.66/oz. Gold is currently trading at $887.40/oz.
S&P
The S&P futures left the squeeze of our 1st tier uptrend and 3rd tier downtrend lines today, but unfortunately they moved to the downside. Market pessimism deepens in reaction to the WHO raising its warning level to 4 while the WSJ reports that both Citigroup and BofA may require more funding after the stress test results are released. The leak of the results may be hinting that the stress tests will show U.S. financials are in worse shape than we thought, and the financial institutions are making a preemptive move in an effort to avoid a massive selloff on May 4th. Keep in mind this is just speculation, we are merely trying to put the pieces together. On the positive side, the S&P futures are reacting well to our 2nd tier downtrend line with a nice pop as investors eagerly await the release of CB Consumer Confidence data. Hence, even though negative sentiment is building, the S&P futures still aren’t far away from a huge breakout towards 900. Meanwhile, our 1st tier uptrend and 3rd tier downtrend lines are crawling towards their inflection point, indicating investors may wait for Wednesday’s Prelim GDP number before making a serious commitment directionally. The Swine Flu surely adds a scary piece to the puzzle. If the flu were to reach epidemic status, an outbreak could have dire consequences for U.S. equities as the recovery in consumption grinds to a halt. However, we will have to wait and see how the situation plays out. Correlation wise, crude futures are trading all over the place, highlighting the uncertainty in the investment world. While crude is sliding downwards, the uptrend still has a glimmer of hope. The EUR/USD and GBP/USD are holding on for dear life as well. All in all, investors are holding their collect breath with so many variables hanging in the balance. First thing’s first, consumer confidence today followed by GDP and the conclusion of the Fed meeting tomorrow.
Fundamentally, our 846.5 support turns resistance while we maintain our resistances of 853, 860.75, 867 and 872.75. To the downside, we hold our supports of 840.25, 833.5, 825.25, and 820 with fresh bottom-end of 811.75. The S&P futures are currently trading at 847.75.
30 Year
The 30 Year T-Bond futures are edging higher Monday, exercising their negative correlation with U.S. equities. However, the 30 Year futures haven’t made any noteworthy fundamental moves to the upside and the downtrend remains in clear control. If the present pullback in the S&P futures were to turn into a large selloff we wouldn’t be surprised to see a corresponding rally in the 30 Year futures. Although, as we’ve witnessed since the announcement of quantitative easing, every move to the upside has failed to materialize into anything noteworthy. The 30 Year’s downside preferential reflects the huge supply of treasuries needed to fund America’s economic stimulus and recovery measures. Hence, the use of quantitative easing is not solving the problem, merely tempering volatility. On a positive note, the 30 Year futures have managed to stay above March lows, preventing a catastrophic selloff.
Fundamentally, our 125.19 resistance turns support while we maintain our supports of 124.78, 124.36, 124.03, and 123.69. To the topside, we hold our resistances of 125.53, 125.81, 126.20, and 126.67 with fresh top-end of 127.25. The 30 Year futures are presently trading at 125 17.5.
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.
