EUR/USD
The EUR/USD rallied nicely yesterday, tagging along with impressive gains in U.S. equities. The movement was a refreshing recovery for the EUR/USD since the currency pair had previously dropped below our 2nd tier downtrend line while hitting our previous bottom-end of 1.3422. The upswing is cooling off today as yesterday’s movement lacked convincing volume and the S&P futures are struggling with previous May highs. The EUR/USD is battling with May highs of its own, meaning it wouldn’t be surprising to see some near-term consolidation with slight downward pressure. Furthermore, the fact that the EUR/USD didn’t rally strongly after much better than expected economic sentiment data shows the currency pair could be overbought. On the other hand, if the EUR/USD and put some upward momentum together and get above previous may highs, we could witness a sizeable near-term pop towards the highly psychological 1.40 level.
Regardless of near-term obstacles, the EUR/USD is showing resilience above our 2nd tier downtrend line and the psychological 1.35 level. Therefore, the EUR/USD is sending a clear bullish message trend-wise with key medium-term downtrend pressures out of the way. As usual, the ultimate direction of the EUR/USD relies heavily upon U.S. equities. The S&P futures staged quite a rally yesterday and are back above the psychological 900 level, making a convincing argument for the continuation of its uptrend. Therefore, equities are performing in favor of the EUR/USD’s uptrend. As a result, we maintain our bullish outlook on the EUR/USD as long as the currency pair can stay above our downtrend lines and the 1.35 psychological level. However, the EUR/GBP is showing considerable downward pressure, indicating the Euro could continue to experience relative weakness over the medium-term. The EU will be quiet on the news front until Wednesday’s German PPI where investors are looking for an improvement in producer prices.
Fundamentally, we find resistances of 1.3626, 1.3646, 1.3674, 1.3702, and 1.3735. To the downside, we see supports of 1.3589, 1.3555, 1.3528, 1.3490, and 1.3467. The 1.35 area serves as a psychological cushion with 1.40 acting as a psychological barrier. The EUR/USD is currently exchanging at 1.3616.
GBP/USD
The Cable continues its impressive climb on rising volume despite slightly worse than expected RPI and CPI data points. The pricing numbers were only one basis point below analyst expectations, so the decline wasn’t too much of a surprise. This was the first negative data release we’ve seen from Britain over the past month, and the momentum remains clearly to the upside. The Cable is trading well above our downtrend line. In fact, it’s becoming a non-factor, as is the key psychological 1.50 level. The psychological 1.55 area becomes more of a relevant discussion at this point. Speaking of 1.55, the GBP/USD is also trading near November 26 highs, indicating we could witness some near-term consolidation. Near-term technical obstacles are in play for the EUR/USD as well with the S&P futures battling 900. Hence, all three investment vehicles are sending the same message of near-term struggle with slight downward pressure.
The Cable has climbed above January ’09 highs. The next two obstacles for the GBP/USD are the aforementioned November 26 highs followed by December 17 highs. From here we could witness a nice pop towards our last resort downtrend line, which is off screen but sitting around 1.60 right now. If the Cable can get on top of this downtrend line we could witness exciting near to medium-term gains. However, we still have a ways to go.
We maintain our bullish outlook on the GBP/USD due to the overwhelmingly positive economic data surfacing from Britain over the past month. We’ve seen improvements across the board, from employment to manufacturing to housing prices. We’re witnessing the massive depreciation of the Dollar analysts have warned us about after America’s incredible liquidity measures. However, as with the EUR/USD, the Cable’s ultimate performance is highly reliant upon U.S. equities. Therefore, any collapse in the S&P could be accompanied by a depreciation of the Pound. Fortunately for bulls, the S&P futures still have their upward momentum trend-wise. Investors will be paying particularly close attention to British retail sales on Thursday followed by Revised GDP on Friday to make certain the data supports the positive numbers we’ve seen as of late.
Fundamentally, we find resistances of 1.5551, 1.5600, 1.5663, 1.5717, and 1.5794. To the downside, we see supports of 1.5449, 1.5372, 1.5279, 1.5207, and 1.5134. 1.50 serves as a key psychological cushion with 1.55 acting as a psychological barrier. The GBP/USD is currently exchanging at 1.5492.
USD/JPY
The USD/JPY exercised its positive correlation with U.S. equities yesterday, popping nicely back above the psychological 95.00 level while avoiding our 1st tier uptrend line. However, the currency pair is backing away from our 1st tier downtrend line as yesterday’s volume failed to impress. Meanwhile, the USD/JPY remains lodged in its downtrend line while not participating in the recent surge of U.S. equities like the EUR/USD and GBP/USD. Therefore, the USD/JPY is sending a message of continual relative weakness in the Japanese economy despite improvement in Core Machinery Orders, a forward looking economic indicator. Investors will get a clearer picture later in Wednesday’s session with Japan announcing Prelim GDP. Analysts are anticipating further deterioration in Japan’s GDP, and a surprise in either direction could certainly be a market mover as far as the USD/JPY is concerned.
We maintain our bearish outlook trend-wise on the USD/JPY due to the downward inclination of the currency pair technically and fundamentally. The USD/JPY has failed to destroy the psychological 100 level on several attempts while dropping below all of our downtrend lines. The USD/JPY is at the bottom of its right shoulder, meaning a critical juncture for the currency pair could be approaching with key economic data on the way. March 18 lows and our 1st tier uptrend line are keys fundamentally. If these don’t hold then we could witness accelerated losses. On a positive note, our 1st tier uptrend line is intact with another possible uptrend line should this one be broken. Therefore, if today’s Prelim GDP should come in better than expected and the S&P rally strongly above 900, we could see a fundamental turnaround in the USD/JPY. However, the same difficult fundamental obstacles remain to the upside should any encouraging upswing occur, limiting near-term gains.
Fundamentally, we find resistances of 96.33, 97.32, 97.98, 98.67, and 99.20. To the downside, we see supports of 95.58, 95.12, 94.50, 93.66, and 92.71. The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion. The USD/JPY is currently exchanging at 96.10.
Gold
Gold deflected from our 2nd tier downtrend line on moderate volume yesterday, exercising a negative correlation with U.S. equities. Gold’s correlation with equities continues its erratic behavior, shifting from positive to negative while stuck in between our uptrend and downtrend lines. The precious metal has a web of historical resistances and downtrend lines between present price and the psychological $950/bbl, which means we could see some consolidation mixed with marginal gains for the near-term.
The lack of clarity concerning correlation and trend makes gold a tough read for the time being. Though the precious metal has had some impressive upwards momentum beyond the highly psychological $900/oz level, the negative correlation could easily come back with a vengeance should U.S. equities run higher. On the other hand, if gold can fight above our 2nd tier uptrend line we could see a nice near-term pop towards our 2nd tier downtrend line. Due to the uncertainty surrounding gold we maintain our neutral outlook.
Fundamentally we find supports of $925.30/oz, $922.44/oz, $919.19/oz, $917.65/oz, and $915.94/oz. To the topside, we see resistances of $928.10/oz, $931.99/oz, $933.73/oz, $936.02/oz, and $938.41/oz. Gold is currently trading at $925.95/oz.
Disclaimer: FastBrokers' market commentary is provided for information purposes only and under no circumstances should be regarded neither as 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 nicely yesterday, tagging along with impressive gains in U.S. equities. The movement was a refreshing recovery for the EUR/USD since the currency pair had previously dropped below our 2nd tier downtrend line while hitting our previous bottom-end of 1.3422. The upswing is cooling off today as yesterday’s movement lacked convincing volume and the S&P futures are struggling with previous May highs. The EUR/USD is battling with May highs of its own, meaning it wouldn’t be surprising to see some near-term consolidation with slight downward pressure. Furthermore, the fact that the EUR/USD didn’t rally strongly after much better than expected economic sentiment data shows the currency pair could be overbought. On the other hand, if the EUR/USD and put some upward momentum together and get above previous may highs, we could witness a sizeable near-term pop towards the highly psychological 1.40 level.
Regardless of near-term obstacles, the EUR/USD is showing resilience above our 2nd tier downtrend line and the psychological 1.35 level. Therefore, the EUR/USD is sending a clear bullish message trend-wise with key medium-term downtrend pressures out of the way. As usual, the ultimate direction of the EUR/USD relies heavily upon U.S. equities. The S&P futures staged quite a rally yesterday and are back above the psychological 900 level, making a convincing argument for the continuation of its uptrend. Therefore, equities are performing in favor of the EUR/USD’s uptrend. As a result, we maintain our bullish outlook on the EUR/USD as long as the currency pair can stay above our downtrend lines and the 1.35 psychological level. However, the EUR/GBP is showing considerable downward pressure, indicating the Euro could continue to experience relative weakness over the medium-term. The EU will be quiet on the news front until Wednesday’s German PPI where investors are looking for an improvement in producer prices.
Fundamentally, we find resistances of 1.3626, 1.3646, 1.3674, 1.3702, and 1.3735. To the downside, we see supports of 1.3589, 1.3555, 1.3528, 1.3490, and 1.3467. The 1.35 area serves as a psychological cushion with 1.40 acting as a psychological barrier. The EUR/USD is currently exchanging at 1.3616.
GBP/USD
The Cable continues its impressive climb on rising volume despite slightly worse than expected RPI and CPI data points. The pricing numbers were only one basis point below analyst expectations, so the decline wasn’t too much of a surprise. This was the first negative data release we’ve seen from Britain over the past month, and the momentum remains clearly to the upside. The Cable is trading well above our downtrend line. In fact, it’s becoming a non-factor, as is the key psychological 1.50 level. The psychological 1.55 area becomes more of a relevant discussion at this point. Speaking of 1.55, the GBP/USD is also trading near November 26 highs, indicating we could witness some near-term consolidation. Near-term technical obstacles are in play for the EUR/USD as well with the S&P futures battling 900. Hence, all three investment vehicles are sending the same message of near-term struggle with slight downward pressure.
The Cable has climbed above January ’09 highs. The next two obstacles for the GBP/USD are the aforementioned November 26 highs followed by December 17 highs. From here we could witness a nice pop towards our last resort downtrend line, which is off screen but sitting around 1.60 right now. If the Cable can get on top of this downtrend line we could witness exciting near to medium-term gains. However, we still have a ways to go.
We maintain our bullish outlook on the GBP/USD due to the overwhelmingly positive economic data surfacing from Britain over the past month. We’ve seen improvements across the board, from employment to manufacturing to housing prices. We’re witnessing the massive depreciation of the Dollar analysts have warned us about after America’s incredible liquidity measures. However, as with the EUR/USD, the Cable’s ultimate performance is highly reliant upon U.S. equities. Therefore, any collapse in the S&P could be accompanied by a depreciation of the Pound. Fortunately for bulls, the S&P futures still have their upward momentum trend-wise. Investors will be paying particularly close attention to British retail sales on Thursday followed by Revised GDP on Friday to make certain the data supports the positive numbers we’ve seen as of late.
Fundamentally, we find resistances of 1.5551, 1.5600, 1.5663, 1.5717, and 1.5794. To the downside, we see supports of 1.5449, 1.5372, 1.5279, 1.5207, and 1.5134. 1.50 serves as a key psychological cushion with 1.55 acting as a psychological barrier. The GBP/USD is currently exchanging at 1.5492.
USD/JPY
The USD/JPY exercised its positive correlation with U.S. equities yesterday, popping nicely back above the psychological 95.00 level while avoiding our 1st tier uptrend line. However, the currency pair is backing away from our 1st tier downtrend line as yesterday’s volume failed to impress. Meanwhile, the USD/JPY remains lodged in its downtrend line while not participating in the recent surge of U.S. equities like the EUR/USD and GBP/USD. Therefore, the USD/JPY is sending a message of continual relative weakness in the Japanese economy despite improvement in Core Machinery Orders, a forward looking economic indicator. Investors will get a clearer picture later in Wednesday’s session with Japan announcing Prelim GDP. Analysts are anticipating further deterioration in Japan’s GDP, and a surprise in either direction could certainly be a market mover as far as the USD/JPY is concerned.
We maintain our bearish outlook trend-wise on the USD/JPY due to the downward inclination of the currency pair technically and fundamentally. The USD/JPY has failed to destroy the psychological 100 level on several attempts while dropping below all of our downtrend lines. The USD/JPY is at the bottom of its right shoulder, meaning a critical juncture for the currency pair could be approaching with key economic data on the way. March 18 lows and our 1st tier uptrend line are keys fundamentally. If these don’t hold then we could witness accelerated losses. On a positive note, our 1st tier uptrend line is intact with another possible uptrend line should this one be broken. Therefore, if today’s Prelim GDP should come in better than expected and the S&P rally strongly above 900, we could see a fundamental turnaround in the USD/JPY. However, the same difficult fundamental obstacles remain to the upside should any encouraging upswing occur, limiting near-term gains.
Fundamentally, we find resistances of 96.33, 97.32, 97.98, 98.67, and 99.20. To the downside, we see supports of 95.58, 95.12, 94.50, 93.66, and 92.71. The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion. The USD/JPY is currently exchanging at 96.10.
Gold
Gold deflected from our 2nd tier downtrend line on moderate volume yesterday, exercising a negative correlation with U.S. equities. Gold’s correlation with equities continues its erratic behavior, shifting from positive to negative while stuck in between our uptrend and downtrend lines. The precious metal has a web of historical resistances and downtrend lines between present price and the psychological $950/bbl, which means we could see some consolidation mixed with marginal gains for the near-term.
The lack of clarity concerning correlation and trend makes gold a tough read for the time being. Though the precious metal has had some impressive upwards momentum beyond the highly psychological $900/oz level, the negative correlation could easily come back with a vengeance should U.S. equities run higher. On the other hand, if gold can fight above our 2nd tier uptrend line we could see a nice near-term pop towards our 2nd tier downtrend line. Due to the uncertainty surrounding gold we maintain our neutral outlook.
Fundamentally we find supports of $925.30/oz, $922.44/oz, $919.19/oz, $917.65/oz, and $915.94/oz. To the topside, we see resistances of $928.10/oz, $931.99/oz, $933.73/oz, $936.02/oz, and $938.41/oz. Gold is currently trading at $925.95/oz.
Disclaimer: FastBrokers' market commentary is provided for information purposes only and under no circumstances should be regarded neither as 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.
