EUR/USD Sets Its Sights On 1.40
The EUR/USD continues its balancing act from our 2nd tier uptrend line, and is making a push for the psychological 1.40 level. Despite the recovery from 5/28 lows, volume is declining with the upward movement, signaling a lack of support to the upside. The largest volume we’ve seen in the last month was on the sell side. Therefore, we aren’t convinced that Monday’s bottom will be lasting. The key barriers to the upside for the near-term are 1.40, our 3rd tier uptrend line and 1.4035 resistance. If the EUR/USD can climb past these obstacles, we could see a near-term pop towards 1.41. However, the downward pressure on the EUR/USD seems to be greater than the near-term upward momentum, meaning we could see further losses from present levels. To the downside, our 2nd tier uptrend line and 5/28 lows are the important lines of defense. If these floors are broken we could see near-term losses accelerate. Though we maintain our negative outlook on the EUR/USD for the near-term, the medium-term uptrend has an incredible foundation built up over the year. With all of the economic data coming in signaling a global recovery, it will take a hefty blow to destroy the uptrend in place.
The EUR/GBP is buckling under the pressure of its downtrend, indicating a relative weakness in the Euro. The weakness results from a disappointing German Industrial Production number this morning. While the lackluster data point is negative, the development is nothing to be overly concerned about at this time. The question becomes whether the slowdown in industrial production is just a bump in the road to recovery, or if the data slumps back into its downtrend. We won’t get a better idea until next month’s release, yet investors should take note nonetheless. With the EU relatively quiet data-wise this week, the EUR/USD may take its lead from U.S. equities. Therefore, if we see a breakout in the S&P futures to the upside, the EUR/USD could follow suit due to their positive correlation. Meanwhile, investors should keep a close eye on volume patters in the EUR/USD to see whether there is more interest to the downside.
Fundamentally, we find resistances of 1.4003, 1.4035, 1.4090, 1.4103, 1.4139, and 1.4185. To the downside, we see supports of 1.3945, 1.3891, 1.33855, 1.3815, and 1.3766. The 1.40 area serves as a psychological resistance with 1.35 acting as a psychological cushion. The EUR/USD is currently exchanging at 1.3986.
GBP/USD Makes a Solid Push Back Above 1.60
The Cable has propelled from our 3rd tier uptrend line to make a solid run past the psychological 1.60 level. While the performance of the GBP/USD over the last 24 hours has been encouraging, the upward movement came with relatively weak volume as compared to last week’s pullback. Regardless, bulls are coming to the defense of the Cable, and the currency pair could make a pop toward our 2nd tier downtrend line. As with the EUR/USD, the significant volume to the downside was disconcerting and makes us contemplate whether we have entered a new, near-term downtrend. U.S. equities and crude futures are on an impressive run, and there is belief that these investment vehicles may have overextended themselves.
Since economic data will be relatively quiet around the globe this week, the Cable may ultimately choose to abide by its positive correlation with the S&P futures. However, Britain will release Manufacturing Production and its Trade Balance tomorrow, which may prove to be market movers. If the economic data comes in weaker than anticipated and U.S. equities experience profit taking, we would not be surprised to see the Cable exhibit further downward pressure. That being said, we maintain our near-term negative outlook on the GBP/USD unless we see a strong move to the upside accompanied by convincing volume. On the other hand, the climb back above 1.60 is certainly encouraging, and we wouldn’t be surprised to witness more upward momentum today.
Meanwhile, the Pound continues to show relative strength, exemplified by the negative performance of the EUR/GBP. This is likely due to the fact that EU and U.S. economic data has been coming in mixed over the past six weeks, while numbers from Britain have been overwhelmingly positive. Therefore, we believe pure economic fundamentals are giving the Pound its edge. Furthermore, as a result of the improvement in economic data, we believe the medium-term still has a lot of strength despite any near-term downward pressure.
Fundamentally, we find resistances of 1.6233, 1.6315, 1.6371, 1.6412, and 1.6458. To the downside, we see supports of 1.5863, 1.5777, 1.5703, 1.5629, and 1.5552. The 1.60 level acts as a psychological cushion with 1.65 serving as a psychological barrier. The GBP/USD is currently exchanging at 1.6222.
.
USD/JPY Bows to Our 3rd Tier Downtrend Line
The USD/JPY is turning south from our 3rd tier downtrend line as we notice a Dollar appreciation across the board today. We haven’t seen any abnormal volume to the upside on the 1-day chart, leading us to believe that the USD/JPY may remain in its steady downtrend. It would take an aggressive movement to the upside past May highs and our downtrend lines on substantial volume for us to alter our negative outlook on the currency pair. On the other hand, we do notice some near-term downward pressure on both the GBP/USD and EUR/USD. If the USD/JPY keeps its new negative correlation with these currency pairs and they weaken from further levels, the USD/JPY could make a push for 100. However, the correlations between the USD/JPY and these currency pairs are fragile because they exhibited a positive correlation since last September. It will be very interesting to see how the USD/JPY behaves over the next few trading sessions, and whether the currency pair can piece together some upward momentum.
Meanwhile, investors will keep a close watch on the Core Machinery Orders release from Japan later today. Core Machinery Orders are forward looking since the purchase of heavy machinery normally indicates an expected increase in production, telling us a lot about Japanese exports and consequently global demand and consumption. Core Machinery Orders have climbed back to respectable levels since January’s shocking negative number. Analysts expect an increase of 0.1%, and the release is likely to be a market mover.
Fundamentally, we find resistances of 97.98, 98.66, 99.49, 100.06, and 100.74. To the downside, we see supports of 97.45, 96.90, 96.33, 95.82, and 95.20. The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion. The USD/JPY is currently exchanging at 97.60.
Crude Walks along Our 2nd Tier Uptrend Line towards Yearly Highs
Crude futures are strengthening from our 2nd tier uptrend line as commodities head north in unison. No news seems to be good news, and with economic data releases relatively quiet the bulls are finding solace in crude’s strong upward momentum. However, crude futures still need to deal with $70/bbl and yearly highs before the futures can make any more noteworthy moves to the upside. The thought of crude trading at $70/bbl+ seems to have a stronger psychological ring to it than $60/bbl. Fair price is certainly coming into question, and investors may need to see more confirmation via economic data, crude supply, or corporate earnings before they make any more meaningful bullish commitments.
Speaking of supply, Wednesday’s release of weekly crude oil inventories could prove to be a market mover since we saw a surprising pop to the upside in supply last week. If inventories come in above analyst expectations again we may see crude buckle under some near-term downward pressure. That being said, volume has been declining steadily since June 3rd’s pullback, meaning crude could have some trouble getting past technical barriers unless the action picks up in a positive way. Meanwhile, the S&P futures are moving sideways, which is little help to the uptrend’s cause. Investors should also take note of the Dollar’s recent appreciation. A stronger Dollar weakens global demand for Dollar-denominated commodities, and any further fundamental appreciation could send crude futures lower.
It is difficult to remove the bullish outlook on crude futures right now since it is trading back near yearly highs while our 2nd tier uptrend line is intact. However, should we see another pullback on large volume we could see a near-term downtrend form towards our 1st tier uptrend line.
Fundamentally, we find supports of $68.83/bbl, $67.91/bbl, $67.29/bbl, $66.78/bbl, and $66.13/bbl. To the topside, we see resistances of $69.39/bbl and $70.35/bbl. $65/bbl becomes a psychological cushion with $70/bbl serving as a psychological barrier. The crude futures are currently trading at $69.13/bbl.
Gold Climbs with a Depreciating Dollar
Gold continues its recovery from our 2nd tier uptrend line and the psychological $950/oz level as it rises with the depreciation of the greenback. Volume is perking up slightly, a positive sign technically. However, volume is still weak as compared to last week’s pullback, meaning we could be in store for more downward pressure once the present bounce tops out. The precious metal is encountering our 3rd tier uptrend line and $963.45/oz resistance. If gold can climb past these barriers, we could witness a near-term pop towards our 2nd tier downtrend line.
Meanwhile, investors should keep an eye on the behavior of the GBP/USD, EUR/USD, and S&P futures. Gold’s positive correlation with both the GBP/USD and EUR/USD seems intact, while these currency pairs may follow U.S. equities this week due to the relatively light presence of economic data. Even though today’s pop is encouraging, we maintain our negative near-term outlook on gold due to the recent, overwhelming volume to the downside. If the precious metal does experience more downward pressure, our 2nd tier uptrend line and 5/26 lows should prove to be key defenses against accelerated movements to the downside.
Fundamentally we find resistances of $960.47/oz, $963.45/oz, $965.98/oz, $968.77/oz, and $972.32/oz. To the downside, we see supports of $957.11/oz, $954.32/oz, $951.79/oz, $946.47/oz, and $943.68/oz. Gold is currently trading at $959.90/oz.
S&P Futures Level Out With Little Economic Data
The S&P futures are moving sideways within a tight trading range formed over the last week. They remain lodged between our uptrend lines, with yearly highs hanging just above. Meanwhile, U.S. equities have disregarded the volatility in currency markets. This has worked in favor of the S&P futures since the rapid appreciation of the greenback we saw last week didn’t have its usual negative impact on U.S. equities. On the other hand, the S&P futures aren’t participating in the depreciation of the Dollar today either. It seems equity investors are taking a breather due to the relatively light week of economic data ahead. We maintain our positive outlook on the S&P futures as they build up a new base above our 2nd tier uptrend line. Meanwhile, our downtrend line is fading into the distance. It would take a large retracement on significant volume below our 2nd tier uptrend line for us to reconsider our position. Investors should keep a close eye on the GBP/USD and EUR/USD to see whether they can piece together some upward momentum and avoid breaking below anymore key fundamentals.
Fundamentally, we maintain resistances of 939.5, 945.75 and 958.25. To the downside we hold our supports of 931, 924.75, 915.5, and 905.5 with fresh bottom-end of 897.25. The S&P futures are currently trading at 938.75.
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 continues its balancing act from our 2nd tier uptrend line, and is making a push for the psychological 1.40 level. Despite the recovery from 5/28 lows, volume is declining with the upward movement, signaling a lack of support to the upside. The largest volume we’ve seen in the last month was on the sell side. Therefore, we aren’t convinced that Monday’s bottom will be lasting. The key barriers to the upside for the near-term are 1.40, our 3rd tier uptrend line and 1.4035 resistance. If the EUR/USD can climb past these obstacles, we could see a near-term pop towards 1.41. However, the downward pressure on the EUR/USD seems to be greater than the near-term upward momentum, meaning we could see further losses from present levels. To the downside, our 2nd tier uptrend line and 5/28 lows are the important lines of defense. If these floors are broken we could see near-term losses accelerate. Though we maintain our negative outlook on the EUR/USD for the near-term, the medium-term uptrend has an incredible foundation built up over the year. With all of the economic data coming in signaling a global recovery, it will take a hefty blow to destroy the uptrend in place.
The EUR/GBP is buckling under the pressure of its downtrend, indicating a relative weakness in the Euro. The weakness results from a disappointing German Industrial Production number this morning. While the lackluster data point is negative, the development is nothing to be overly concerned about at this time. The question becomes whether the slowdown in industrial production is just a bump in the road to recovery, or if the data slumps back into its downtrend. We won’t get a better idea until next month’s release, yet investors should take note nonetheless. With the EU relatively quiet data-wise this week, the EUR/USD may take its lead from U.S. equities. Therefore, if we see a breakout in the S&P futures to the upside, the EUR/USD could follow suit due to their positive correlation. Meanwhile, investors should keep a close eye on volume patters in the EUR/USD to see whether there is more interest to the downside.
Fundamentally, we find resistances of 1.4003, 1.4035, 1.4090, 1.4103, 1.4139, and 1.4185. To the downside, we see supports of 1.3945, 1.3891, 1.33855, 1.3815, and 1.3766. The 1.40 area serves as a psychological resistance with 1.35 acting as a psychological cushion. The EUR/USD is currently exchanging at 1.3986.
GBP/USD Makes a Solid Push Back Above 1.60
The Cable has propelled from our 3rd tier uptrend line to make a solid run past the psychological 1.60 level. While the performance of the GBP/USD over the last 24 hours has been encouraging, the upward movement came with relatively weak volume as compared to last week’s pullback. Regardless, bulls are coming to the defense of the Cable, and the currency pair could make a pop toward our 2nd tier downtrend line. As with the EUR/USD, the significant volume to the downside was disconcerting and makes us contemplate whether we have entered a new, near-term downtrend. U.S. equities and crude futures are on an impressive run, and there is belief that these investment vehicles may have overextended themselves.
Since economic data will be relatively quiet around the globe this week, the Cable may ultimately choose to abide by its positive correlation with the S&P futures. However, Britain will release Manufacturing Production and its Trade Balance tomorrow, which may prove to be market movers. If the economic data comes in weaker than anticipated and U.S. equities experience profit taking, we would not be surprised to see the Cable exhibit further downward pressure. That being said, we maintain our near-term negative outlook on the GBP/USD unless we see a strong move to the upside accompanied by convincing volume. On the other hand, the climb back above 1.60 is certainly encouraging, and we wouldn’t be surprised to witness more upward momentum today.
Meanwhile, the Pound continues to show relative strength, exemplified by the negative performance of the EUR/GBP. This is likely due to the fact that EU and U.S. economic data has been coming in mixed over the past six weeks, while numbers from Britain have been overwhelmingly positive. Therefore, we believe pure economic fundamentals are giving the Pound its edge. Furthermore, as a result of the improvement in economic data, we believe the medium-term still has a lot of strength despite any near-term downward pressure.
Fundamentally, we find resistances of 1.6233, 1.6315, 1.6371, 1.6412, and 1.6458. To the downside, we see supports of 1.5863, 1.5777, 1.5703, 1.5629, and 1.5552. The 1.60 level acts as a psychological cushion with 1.65 serving as a psychological barrier. The GBP/USD is currently exchanging at 1.6222.
.
USD/JPY Bows to Our 3rd Tier Downtrend Line
The USD/JPY is turning south from our 3rd tier downtrend line as we notice a Dollar appreciation across the board today. We haven’t seen any abnormal volume to the upside on the 1-day chart, leading us to believe that the USD/JPY may remain in its steady downtrend. It would take an aggressive movement to the upside past May highs and our downtrend lines on substantial volume for us to alter our negative outlook on the currency pair. On the other hand, we do notice some near-term downward pressure on both the GBP/USD and EUR/USD. If the USD/JPY keeps its new negative correlation with these currency pairs and they weaken from further levels, the USD/JPY could make a push for 100. However, the correlations between the USD/JPY and these currency pairs are fragile because they exhibited a positive correlation since last September. It will be very interesting to see how the USD/JPY behaves over the next few trading sessions, and whether the currency pair can piece together some upward momentum.
Meanwhile, investors will keep a close watch on the Core Machinery Orders release from Japan later today. Core Machinery Orders are forward looking since the purchase of heavy machinery normally indicates an expected increase in production, telling us a lot about Japanese exports and consequently global demand and consumption. Core Machinery Orders have climbed back to respectable levels since January’s shocking negative number. Analysts expect an increase of 0.1%, and the release is likely to be a market mover.
Fundamentally, we find resistances of 97.98, 98.66, 99.49, 100.06, and 100.74. To the downside, we see supports of 97.45, 96.90, 96.33, 95.82, and 95.20. The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion. The USD/JPY is currently exchanging at 97.60.
Crude Walks along Our 2nd Tier Uptrend Line towards Yearly Highs
Crude futures are strengthening from our 2nd tier uptrend line as commodities head north in unison. No news seems to be good news, and with economic data releases relatively quiet the bulls are finding solace in crude’s strong upward momentum. However, crude futures still need to deal with $70/bbl and yearly highs before the futures can make any more noteworthy moves to the upside. The thought of crude trading at $70/bbl+ seems to have a stronger psychological ring to it than $60/bbl. Fair price is certainly coming into question, and investors may need to see more confirmation via economic data, crude supply, or corporate earnings before they make any more meaningful bullish commitments.
Speaking of supply, Wednesday’s release of weekly crude oil inventories could prove to be a market mover since we saw a surprising pop to the upside in supply last week. If inventories come in above analyst expectations again we may see crude buckle under some near-term downward pressure. That being said, volume has been declining steadily since June 3rd’s pullback, meaning crude could have some trouble getting past technical barriers unless the action picks up in a positive way. Meanwhile, the S&P futures are moving sideways, which is little help to the uptrend’s cause. Investors should also take note of the Dollar’s recent appreciation. A stronger Dollar weakens global demand for Dollar-denominated commodities, and any further fundamental appreciation could send crude futures lower.
It is difficult to remove the bullish outlook on crude futures right now since it is trading back near yearly highs while our 2nd tier uptrend line is intact. However, should we see another pullback on large volume we could see a near-term downtrend form towards our 1st tier uptrend line.
Fundamentally, we find supports of $68.83/bbl, $67.91/bbl, $67.29/bbl, $66.78/bbl, and $66.13/bbl. To the topside, we see resistances of $69.39/bbl and $70.35/bbl. $65/bbl becomes a psychological cushion with $70/bbl serving as a psychological barrier. The crude futures are currently trading at $69.13/bbl.
Gold Climbs with a Depreciating Dollar
Gold continues its recovery from our 2nd tier uptrend line and the psychological $950/oz level as it rises with the depreciation of the greenback. Volume is perking up slightly, a positive sign technically. However, volume is still weak as compared to last week’s pullback, meaning we could be in store for more downward pressure once the present bounce tops out. The precious metal is encountering our 3rd tier uptrend line and $963.45/oz resistance. If gold can climb past these barriers, we could witness a near-term pop towards our 2nd tier downtrend line.
Meanwhile, investors should keep an eye on the behavior of the GBP/USD, EUR/USD, and S&P futures. Gold’s positive correlation with both the GBP/USD and EUR/USD seems intact, while these currency pairs may follow U.S. equities this week due to the relatively light presence of economic data. Even though today’s pop is encouraging, we maintain our negative near-term outlook on gold due to the recent, overwhelming volume to the downside. If the precious metal does experience more downward pressure, our 2nd tier uptrend line and 5/26 lows should prove to be key defenses against accelerated movements to the downside.
Fundamentally we find resistances of $960.47/oz, $963.45/oz, $965.98/oz, $968.77/oz, and $972.32/oz. To the downside, we see supports of $957.11/oz, $954.32/oz, $951.79/oz, $946.47/oz, and $943.68/oz. Gold is currently trading at $959.90/oz.
S&P Futures Level Out With Little Economic Data
The S&P futures are moving sideways within a tight trading range formed over the last week. They remain lodged between our uptrend lines, with yearly highs hanging just above. Meanwhile, U.S. equities have disregarded the volatility in currency markets. This has worked in favor of the S&P futures since the rapid appreciation of the greenback we saw last week didn’t have its usual negative impact on U.S. equities. On the other hand, the S&P futures aren’t participating in the depreciation of the Dollar today either. It seems equity investors are taking a breather due to the relatively light week of economic data ahead. We maintain our positive outlook on the S&P futures as they build up a new base above our 2nd tier uptrend line. Meanwhile, our downtrend line is fading into the distance. It would take a large retracement on significant volume below our 2nd tier uptrend line for us to reconsider our position. Investors should keep a close eye on the GBP/USD and EUR/USD to see whether they can piece together some upward momentum and avoid breaking below anymore key fundamentals.
Fundamentally, we maintain resistances of 939.5, 945.75 and 958.25. To the downside we hold our supports of 931, 924.75, 915.5, and 905.5 with fresh bottom-end of 897.25. The S&P futures are currently trading at 938.75.
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.
