EUR/USD Consolidates as Investors Await Thursday’s ECB Meeting
The EUR/USD hit solid resistance in the 1.43 area yesterday as we anticipated, and has pulled back below 1.4222 resistance. Today’s retreat is accompanied by declining volume, indicating the move may be one of consolidation carrying little weight. Yesterday’s trend line inflection point was followed by a pop, but no fundamental movement. However, we wouldn’t be surprised to see the inflection move lag a day or two, so investors should be on their toes. If the EUR/USD can climb above 12/29 highs and our 1.4374 resistance we could witness another near-term breakout. As for the downside, if our 1.4117 support doesn’t hold we could witness a retracement towards 1.40. Investors shouldn’t be too discouraged by consolidation since the medium-term downtrend lines were laid to rest a while ago.
Naturally, investors are highly anticipating Thursday’ ECB news conference. While the central bank is expected to hold its benchmark rate at 1%, the ECB has been prone to surprise investors in an effort to impact the Euro. The investment world will be paying close attention to how Trichet addresses the ECB’s purchase of covered bonds, and whether the EU plans to venture into more extensive alternative liquidity measures, such as quantitative easing. The EU continues to have lingering economic problems, likely due to the scattered composition of the union. The relatively mixed performance of the EU economy has led to a comparatively weak appreciation of the Euro against the Dollar. The EUR/GBP continues its freefall, and it seems there’s more room to go on the downside. Regardless, the EUR/USD is reaping the rewards of a return to a pre-crisis economy, or a very weak Dollar and pricey crude.
Some heavily-weighted U.S. economic data will be hitting the wires today, including the ADP Non-Farm Employment Change, ISM Non-Manufacturing PMI, Factory Orders and weekly Crude Oil Inventories. Therefore, volatility could kick in pretty quickly. The S&P and crude futures are drifting lower this morning, indicating a synchronized pullback. However, we wouldn’t be surprised to see the weakness turn around quickly, especially if today’s economic data should beat analyst expectations. We maintain our bullish outlook trend-wise on the EUR/USD until further notice.
Fundamentally, we maintain our resistances of 1.4222, 1.4290, 1.4325, 1.4374, and 1.4432. To the downside, we hold our supports of 1.4187, 1.4117, 1.4078, 1.4024, and 1.3987. The 1.40 area serves as a psychological cushion with 1.45 acting as a psychological barrier. The EUR/USD is currently exchanging at 1.4201.
GBP/USD Experiences Profit-Taking Despite Stronger Than Expected Services PMI
The Cable’s intraday rally topped out at our 1.6679 resistance, or October 30 highs, as we anticipated. Bulls are stalling and taking profits after an incredible run with investors awaiting today’s data from the U.S. and tomorrow’s BOE and ECB meetings. Speaking of data, Britain’s Services PMI came in above analyst expectations today, indicating expansion with a reading of 51.7. Today’s Services PMI combines with climbing Construction and Manufacturing PMIs to make a home run for Britain as far as Purchasing Manager Indexes are concerned. Hence, we continue to see the Pound exert relative strength and we view today’s movement as healthy weakness. Meanwhile, if the Cable can defeat our 1.6679 resistance we may witness the beginning of another near-term bull run towards the psychological 1.70 level. Our trend lines are gradually reaching their respective inflection points, though these collisions won’t occur until next week. We placed a new tight near-term uptrend line on our chart to give an idea of where strong uptrend support sits.
All eyes will be on the U.S. today with a wave of key economic releases at bat and the Halifax HPI and BOE meeting on deck. Therefore, we anticipate the volatility in major Dollar pairs to pick up and the present consolidation period may end quickly. Today’s performance of the GBP/USD will rely heavily on the S&P futures and their ability to hold above May highs and our 2nd tier uptrend line. If U.S. equities can build upon their upward momentum, then the Cable may follow suit due to their positive correlation. We’ve seen considerable volume on up bars and we have yet to view a fundamental pullback. Therefore, we maintain our bullish outlook on the GBP/USD trend-wise.
Fundamentally, we find resistances of 1.6522, 1.6587, 1.6679, 1.6734, and 1.6854. To the downside, we see supports of 1.6462, 1.6379, 1.6343 1.6307, and 1.6233. The 1.65 level acts as a psychological cushion with 1.70 serving as a psychological barrier. The GBP/USD is currently exchanging at 1.6501.
Gold Bounces Between our 1st and 2nd Tier Downtrend Lines
Gold retested our 2nd tier downtrend line yesterday, yet failed to close above on our 4-hour chart. The precious metal has since pulled back, finding comfort in our 2nd tier downtrend line once more. Gold seems to be settling into a consolidation pattern with the critical $1000/oz level just out of reach. Volume is declining gradually, and it appears investors seek a follow through from either U.S. equities or another strong leg of depreciation in the U.S. Dollar before the precious metal overcomes its own obstacles. The fact that gold is finding strength in our 1st tier downtrend line is encouraging for bulls. However, the inability of the precious metal to climb above 2nd tier is a little disconcerting. Furthermore, until our 3rd tier downtrend line is breached, the possibility remains that gold could duck back into its medium-term downtrend line. We will just have to wait and see how the present pullback plays out and whether fundamentals are compromised to the downside.
Encouragingly, this attempt to beat $1000/oz seems more promising than gold’s last try in February. Both the GBP/USD and EUR/USD made fundamental bull statements a while back, and the global economic recovery is gaining steam. Furthermore, crude has been on a tear as investors worry about future inflation. Gold has traditionally served as a reliable inflationary hedge. Therefore, we maintain our bullish outlook trend-wise unless the precious metal should make a fundamentally significant move to the downside.
Fundamentally we find resistances of $978.11/oz, $980.56/oz, $983.25/oz, $985.33/oz and $987.29/oz. To the downside, we see supports of $975.81/oz, $972.34/oz, $970.35/oz, $967.81/oz, and $964.89/oz. Gold is currently trading at $977.30/oz.
Crude Pulls Back After Disappointing Non-Farm Employment Report
Crude futures continued their consolidation on Tuesday, and are pulling back slightly on Wednesday after a weaker than expected non-farm employment number from the U.S. We view crude’s current weakness as healthy behavior considering its incredible run as of late. Additionally, we wouldn’t be surprised to see crude futures drop back towards our 2nd tier uptrend line, especially should the ISM non-manufacturing PMI come in beneath analyst expectations. While crude futures will continue to exhibit a positive correlation with U.S. equities, crude’s behavior today could depend on the weekly inventories release at 10:30am PST. We saw a significant drop in crude inventories last week, helping fuel the bull-run in crude futures. Hence, it will be interesting to see if the downtrend in inventories carries on. If inventories come in high, crude futures will have more incentive to retrace to our 2nd tier uptrend line. If this should occur and the trend line doesn’t hold, keep a close eye on the psychological $65/bbl level.
Regardless of possible near-term weakness, crude’s uptrend is clearly alive and well. The S&P futures broke through May highs yesterday, a very bullish move. Meanwhile, both the GBP/USD and EUR/USD remain in their respective uptrends, all positive news for crude due to the positive correlations. The recovery of PMI data globally bodes well for the consumption of crude, and rising U.S. equities only fuel the rise of crude futures.
The crude futures are still trading comfortably above our 2nd tier uptrend line, while there haven’t been any fundamental pullbacks on high volume. We will have to see a game-changing setback or considerable consolidation to begin to question the sustainability of crude’s medium-term uptrend. Economic data will roll in throughout the week with the ECB and BOE meetings on Thursday, meaning volatility should remain at a heighted level for the time being. If the economic data comes in above analyst expectations we could see another near-term pop in crude towards the psychological $70/bbl level.
Fundamentally, we maintain our supports of $67.23/bbl, $66.78/bbl, $66.18/bbl, $65.49/bbl, and $63.45/bbl. To the topside, we find resistances of $68.02/bbl, $68.63/bbl, and naturally $70/bbl. $65/bbl becomes a psychological cushion with $70/bbl serving as a psychological barrier. The crude futures are currently trading at $67.50/bbl.
S&P Futures Weaken Back Towards May 7 Highs
The S&P futures are pulling back slightly after yesterday’s consolidation, weakening after a discouraging non-farm employment release. The retracement in the S&P futures can be viewed as a healthy movement, and the question becomes whether the futures can hold above May 7 highs and our 2nd tier uptrend line. Attention quickly turns to the ISM non-manufacturing PMI and factory orders releases coming at 10am PST. If the data points are stronger than expected, then current weakness in U.S. equities may be short-lived.
The market weakness is broad based with crude heading back towards its own 2nd tier uptrend line and gold hesitating just beneath $1000/oz. Meanwhile, the Dollar is strengthening against both the Euro and Pound. Regardless of the broad based weakness, all correlations remain above negative fundamental levels, indicating the S&P futures are in a position to build upon recent gains. If today’s pullback gains traction, investors should keep a close eye on volume to help determine whether there is more room to the downside in the S&P. Even if the S&P futures should retrace between May 7 highs and our 2nd tier uptrend line, they remain well above our 1st tier uptrend and downtrend lines. Speaking of which, these two trend lines are reaching an inflection point today, meaning we could be in for some near-term volatility.
The heavily-weighted news doesn’t end today. Don’t forget both the BOE and ECB will announce their monetary policy decision tomorrow in conjunction with weekly unemployment claims from the U.S. and the Halifax HPI from Britain. To top the week off, the U.S. will release its unemployment rate on Friday along with the non-farm unemployment change. Therefore, we advise investors not to get too comfortable from yesterday’s consolidation. Regardless of near-term weakness, we maintain our bullish outlook trend-wise on the S&P futures unless they should drop beneath key bear fundamentals on significant volume.
Fundamentally, we maintain resistances of 942.75 and 950. To the downside we hold our supports of 931, 924.75, 915.5, and 905.5. The S&P futures are currently trading at 934.50.
30 Year T-Bond Attempt to Build a Bottom
The 30 Year T-Bond futures consolidated yesterday and are gaining a little upward momentum today after a worse than expected non-farm employment report. Meanwhile, the futures are at least piecing together a temporary bottom, giving analysts a sigh of relief with Treasury yields balancing. The question becomes whether the 30 Year futures can build some upward momentum. The first test will be our 3rd tier downtrend line. If the futures can climb past this obstacle, we may witness a nice near-term pop beyond May 29 highs. As we mentioned previously, if yields are to top out and trend south, now would be the appropriate time. Bond investors will be paying close attention to the S&P futures and their ability to sustain recent fundamental gains amid downward pressure. If there happens to be a significant retracement in the S&P futures beneath May 7 highs, this might provide the catalyst to send the 30 Year future beyond their 3rd tier downtrend line. Regardless of present strength in the 30 Year futures, we maintain our bullish outlook trend wise unless we see a game-changing movement to the upside.
Fundamentally, we find supports of 117.23, 116.23, 116.10, and 115.67. To the topside we see resistances hanging at 117.69, 118.36, 118.83, and 119.56. The 30 Year T-Bond futures are currently trading at 117 10.5.
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 hit solid resistance in the 1.43 area yesterday as we anticipated, and has pulled back below 1.4222 resistance. Today’s retreat is accompanied by declining volume, indicating the move may be one of consolidation carrying little weight. Yesterday’s trend line inflection point was followed by a pop, but no fundamental movement. However, we wouldn’t be surprised to see the inflection move lag a day or two, so investors should be on their toes. If the EUR/USD can climb above 12/29 highs and our 1.4374 resistance we could witness another near-term breakout. As for the downside, if our 1.4117 support doesn’t hold we could witness a retracement towards 1.40. Investors shouldn’t be too discouraged by consolidation since the medium-term downtrend lines were laid to rest a while ago.
Naturally, investors are highly anticipating Thursday’ ECB news conference. While the central bank is expected to hold its benchmark rate at 1%, the ECB has been prone to surprise investors in an effort to impact the Euro. The investment world will be paying close attention to how Trichet addresses the ECB’s purchase of covered bonds, and whether the EU plans to venture into more extensive alternative liquidity measures, such as quantitative easing. The EU continues to have lingering economic problems, likely due to the scattered composition of the union. The relatively mixed performance of the EU economy has led to a comparatively weak appreciation of the Euro against the Dollar. The EUR/GBP continues its freefall, and it seems there’s more room to go on the downside. Regardless, the EUR/USD is reaping the rewards of a return to a pre-crisis economy, or a very weak Dollar and pricey crude.
Some heavily-weighted U.S. economic data will be hitting the wires today, including the ADP Non-Farm Employment Change, ISM Non-Manufacturing PMI, Factory Orders and weekly Crude Oil Inventories. Therefore, volatility could kick in pretty quickly. The S&P and crude futures are drifting lower this morning, indicating a synchronized pullback. However, we wouldn’t be surprised to see the weakness turn around quickly, especially if today’s economic data should beat analyst expectations. We maintain our bullish outlook trend-wise on the EUR/USD until further notice.
Fundamentally, we maintain our resistances of 1.4222, 1.4290, 1.4325, 1.4374, and 1.4432. To the downside, we hold our supports of 1.4187, 1.4117, 1.4078, 1.4024, and 1.3987. The 1.40 area serves as a psychological cushion with 1.45 acting as a psychological barrier. The EUR/USD is currently exchanging at 1.4201.
GBP/USD Experiences Profit-Taking Despite Stronger Than Expected Services PMI
The Cable’s intraday rally topped out at our 1.6679 resistance, or October 30 highs, as we anticipated. Bulls are stalling and taking profits after an incredible run with investors awaiting today’s data from the U.S. and tomorrow’s BOE and ECB meetings. Speaking of data, Britain’s Services PMI came in above analyst expectations today, indicating expansion with a reading of 51.7. Today’s Services PMI combines with climbing Construction and Manufacturing PMIs to make a home run for Britain as far as Purchasing Manager Indexes are concerned. Hence, we continue to see the Pound exert relative strength and we view today’s movement as healthy weakness. Meanwhile, if the Cable can defeat our 1.6679 resistance we may witness the beginning of another near-term bull run towards the psychological 1.70 level. Our trend lines are gradually reaching their respective inflection points, though these collisions won’t occur until next week. We placed a new tight near-term uptrend line on our chart to give an idea of where strong uptrend support sits.
All eyes will be on the U.S. today with a wave of key economic releases at bat and the Halifax HPI and BOE meeting on deck. Therefore, we anticipate the volatility in major Dollar pairs to pick up and the present consolidation period may end quickly. Today’s performance of the GBP/USD will rely heavily on the S&P futures and their ability to hold above May highs and our 2nd tier uptrend line. If U.S. equities can build upon their upward momentum, then the Cable may follow suit due to their positive correlation. We’ve seen considerable volume on up bars and we have yet to view a fundamental pullback. Therefore, we maintain our bullish outlook on the GBP/USD trend-wise.
Fundamentally, we find resistances of 1.6522, 1.6587, 1.6679, 1.6734, and 1.6854. To the downside, we see supports of 1.6462, 1.6379, 1.6343 1.6307, and 1.6233. The 1.65 level acts as a psychological cushion with 1.70 serving as a psychological barrier. The GBP/USD is currently exchanging at 1.6501.
Gold Bounces Between our 1st and 2nd Tier Downtrend Lines
Gold retested our 2nd tier downtrend line yesterday, yet failed to close above on our 4-hour chart. The precious metal has since pulled back, finding comfort in our 2nd tier downtrend line once more. Gold seems to be settling into a consolidation pattern with the critical $1000/oz level just out of reach. Volume is declining gradually, and it appears investors seek a follow through from either U.S. equities or another strong leg of depreciation in the U.S. Dollar before the precious metal overcomes its own obstacles. The fact that gold is finding strength in our 1st tier downtrend line is encouraging for bulls. However, the inability of the precious metal to climb above 2nd tier is a little disconcerting. Furthermore, until our 3rd tier downtrend line is breached, the possibility remains that gold could duck back into its medium-term downtrend line. We will just have to wait and see how the present pullback plays out and whether fundamentals are compromised to the downside.
Encouragingly, this attempt to beat $1000/oz seems more promising than gold’s last try in February. Both the GBP/USD and EUR/USD made fundamental bull statements a while back, and the global economic recovery is gaining steam. Furthermore, crude has been on a tear as investors worry about future inflation. Gold has traditionally served as a reliable inflationary hedge. Therefore, we maintain our bullish outlook trend-wise unless the precious metal should make a fundamentally significant move to the downside.
Fundamentally we find resistances of $978.11/oz, $980.56/oz, $983.25/oz, $985.33/oz and $987.29/oz. To the downside, we see supports of $975.81/oz, $972.34/oz, $970.35/oz, $967.81/oz, and $964.89/oz. Gold is currently trading at $977.30/oz.
Crude Pulls Back After Disappointing Non-Farm Employment Report
Crude futures continued their consolidation on Tuesday, and are pulling back slightly on Wednesday after a weaker than expected non-farm employment number from the U.S. We view crude’s current weakness as healthy behavior considering its incredible run as of late. Additionally, we wouldn’t be surprised to see crude futures drop back towards our 2nd tier uptrend line, especially should the ISM non-manufacturing PMI come in beneath analyst expectations. While crude futures will continue to exhibit a positive correlation with U.S. equities, crude’s behavior today could depend on the weekly inventories release at 10:30am PST. We saw a significant drop in crude inventories last week, helping fuel the bull-run in crude futures. Hence, it will be interesting to see if the downtrend in inventories carries on. If inventories come in high, crude futures will have more incentive to retrace to our 2nd tier uptrend line. If this should occur and the trend line doesn’t hold, keep a close eye on the psychological $65/bbl level.
Regardless of possible near-term weakness, crude’s uptrend is clearly alive and well. The S&P futures broke through May highs yesterday, a very bullish move. Meanwhile, both the GBP/USD and EUR/USD remain in their respective uptrends, all positive news for crude due to the positive correlations. The recovery of PMI data globally bodes well for the consumption of crude, and rising U.S. equities only fuel the rise of crude futures.
The crude futures are still trading comfortably above our 2nd tier uptrend line, while there haven’t been any fundamental pullbacks on high volume. We will have to see a game-changing setback or considerable consolidation to begin to question the sustainability of crude’s medium-term uptrend. Economic data will roll in throughout the week with the ECB and BOE meetings on Thursday, meaning volatility should remain at a heighted level for the time being. If the economic data comes in above analyst expectations we could see another near-term pop in crude towards the psychological $70/bbl level.
Fundamentally, we maintain our supports of $67.23/bbl, $66.78/bbl, $66.18/bbl, $65.49/bbl, and $63.45/bbl. To the topside, we find resistances of $68.02/bbl, $68.63/bbl, and naturally $70/bbl. $65/bbl becomes a psychological cushion with $70/bbl serving as a psychological barrier. The crude futures are currently trading at $67.50/bbl.
S&P Futures Weaken Back Towards May 7 Highs
The S&P futures are pulling back slightly after yesterday’s consolidation, weakening after a discouraging non-farm employment release. The retracement in the S&P futures can be viewed as a healthy movement, and the question becomes whether the futures can hold above May 7 highs and our 2nd tier uptrend line. Attention quickly turns to the ISM non-manufacturing PMI and factory orders releases coming at 10am PST. If the data points are stronger than expected, then current weakness in U.S. equities may be short-lived.
The market weakness is broad based with crude heading back towards its own 2nd tier uptrend line and gold hesitating just beneath $1000/oz. Meanwhile, the Dollar is strengthening against both the Euro and Pound. Regardless of the broad based weakness, all correlations remain above negative fundamental levels, indicating the S&P futures are in a position to build upon recent gains. If today’s pullback gains traction, investors should keep a close eye on volume to help determine whether there is more room to the downside in the S&P. Even if the S&P futures should retrace between May 7 highs and our 2nd tier uptrend line, they remain well above our 1st tier uptrend and downtrend lines. Speaking of which, these two trend lines are reaching an inflection point today, meaning we could be in for some near-term volatility.
The heavily-weighted news doesn’t end today. Don’t forget both the BOE and ECB will announce their monetary policy decision tomorrow in conjunction with weekly unemployment claims from the U.S. and the Halifax HPI from Britain. To top the week off, the U.S. will release its unemployment rate on Friday along with the non-farm unemployment change. Therefore, we advise investors not to get too comfortable from yesterday’s consolidation. Regardless of near-term weakness, we maintain our bullish outlook trend-wise on the S&P futures unless they should drop beneath key bear fundamentals on significant volume.
Fundamentally, we maintain resistances of 942.75 and 950. To the downside we hold our supports of 931, 924.75, 915.5, and 905.5. The S&P futures are currently trading at 934.50.
30 Year T-Bond Attempt to Build a Bottom
The 30 Year T-Bond futures consolidated yesterday and are gaining a little upward momentum today after a worse than expected non-farm employment report. Meanwhile, the futures are at least piecing together a temporary bottom, giving analysts a sigh of relief with Treasury yields balancing. The question becomes whether the 30 Year futures can build some upward momentum. The first test will be our 3rd tier downtrend line. If the futures can climb past this obstacle, we may witness a nice near-term pop beyond May 29 highs. As we mentioned previously, if yields are to top out and trend south, now would be the appropriate time. Bond investors will be paying close attention to the S&P futures and their ability to sustain recent fundamental gains amid downward pressure. If there happens to be a significant retracement in the S&P futures beneath May 7 highs, this might provide the catalyst to send the 30 Year future beyond their 3rd tier downtrend line. Regardless of present strength in the 30 Year futures, we maintain our bullish outlook trend wise unless we see a game-changing movement to the upside.
Fundamentally, we find supports of 117.23, 116.23, 116.10, and 115.67. To the topside we see resistances hanging at 117.69, 118.36, 118.83, and 119.56. The 30 Year T-Bond futures are currently trading at 117 10.5.
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.
