Daily Market Commentary
EUR/USD Pulls Back Following Encouraging Rebound
The EUR/USD is being denied by our 2nd tier downtrend line after U.S. retail sales and weekly unemployment claims all came in weaker than analysts anticipated. Today’s U.S. data is deflating Wednesday’s rally in reaction to a more upbeat speech from Bernanke following the Fed’s monetary policy meeting. Investors were reassured by Bernanke and ignored weaker than expected industrial production data from the EU. The Dollar’s negative correlation with U.S. equities locked back in after deviating the last few sessions. Investors made an assertive return to risk, yet the EUR/USD didn’t register comparable volume to the upside as it did to the downside last Friday. However, the Euro is exerting some relative strength today after German and French GDP surprised investors by printing positive growth. The EU’s Flash GDP reiterated the improvement by coming in at -0.1% vs. -0.5% expected. Therefore, it appears the EU’s manufacturing hubs, Germany and France, are recovering well despite recent depreciation of the Euro against the Dollar. We believe the improvement in the EU’s economy may be a result of demand from emerging countries such as China, India, and Brazil. Additionally, economic problems in Eastern Europe don’t seem to be having as negative of an impact on the EU region as one might expect.
Today’s GDP news from the EU should be enough to buoy the EUR/USD until tomorrow’s CPI data. An improvement in EU prices couple with stability in the S&P futures would help the EUR/USD hold its ground. Meanwhile, investors should keep an eye on buy-side volume to see whether recent sell-side volume can be countered. Our 2nd tier downtrend line should continue to serve as a reliable immediate-term barrier until we receive more data on Thursday. While the positive correlation between the EUR/USD and the S&P futures seems to be back in place, today’s negative data from the U.S. makes us doubt a serious rally in equities today.
The EUR/USD’s previous pullback this month has created a few barriers to the upside which will need some momentum to overcome. These obstacles include our 2nd and 3rd downtrend line along with August 7th highs. As for the downside, the EUR/USD has technical cushions in our 3rd tier uptrend line and intraday lows. Though today’s pop in the EUR/USD is certainly encouraging, the currency still has something to prove to the topside before we are comfortable with a return to its uptrend.
Present Price: 1.4270
Supports: 1.4274, 1.4262, 1.4241, 1.4216, 1.4200
Resistances: 1.4290, 1.4303, 1.4325, 1.4345, 1.4368
Psychological: 1.40, 1.45
GBP/USD Consolidates after Negative Data from the U.S.
The Cable is gravitating towards our 2nd tier uptrend line, trading well off intraday highs after weaker than expected retail sales and weekly unemployment claims data from the U.S. Meanwhile, it appears the Cable’s positive correlation with U.S. equities is back in play as is the EUR/USD’s. However, despite the GBP/USD’s recent bounce, we haven’t witnessed considerable buy-side volume while two downtrend lines and the psychological 1.70 level bear overhead. Therefore, there remains noticeable near-term downward pressure on the Cable. It seems investors could continue their directional debate with the S&P futures trading back at their highly psychological 1000 zone. We wouldn’t be surprised to see the GBP/USD continue to creep higher towards 1.67 as our 3rd tier uptrend line and 2nd tier downtrend lines approach their inflection point. We recognizing an oncoming inflection point in gold as well, indicating the trading week could end on a volatile note.
Economic data will be quiet on the British front for the remainder of the week, leaving the GBP/USD’s performance dependent on its positive correlation with U.S. equities. Wednesday’s CCC number and Britain’s slight rise in its headline unemployment rate show the rapid improvement in the UK’s labor market is leveling off. Therefore, the Pound could experience relative weakness over the next couple trading sessions, especially if the EU’s CPI data can beat expectations as did today’s GDP releases. Technically speaking, The GBP/USD must confront our 3rd tier and 2nd tier downtrend lines along with the psychological 1.67 level and June 30th highs. As for the downside, the Cable has our 1st and 2nd tier downtrend lines to rely upon along with intraday lows and the highly psychological 1.65 area.
Present Price: 1.6592
Resistances: 1.6611, 1.6632, 1.6648, 1.6665, 1.6702
Supports: 1.6561, 1.6543, 1.6524, 1.6505, 1.6472
Psychological: 1.65
USD/JPY Heads Towards Important Supports
The Yen is continuing its appreciation against the Dollar as investors exercise risk-aversion tactics in reaction to weaker than expected retail sales and employment data. The USD/JPY’s decline coupled with gains in the GBP/USD and EUR/USD indicate investors are exiting the Dollar. Despite the USD/JPY’s present pullback, the currency pair still has important technical cushions in place, including our 1st tier uptrend line and the psychological 95 area. The USD/JPY’s near-term uptrend is intact until these two supports are compromised. Therefore, it will be interesting to see how these supports hold up over the immediate-term. Meanwhile, our 3rd tier downtrend and 1st tier uptrend lines are gradually approaching their inflection point. Hence, the USD/JPY could jog between these trend lines as their collision course nears. We notice inflection points in the rest of currency pairs along with gold. As a result, FX volatility could continue for the next couple trading sessions. On the other hand, the USD/JPY has re-entered a dense trading range, meaning a period of consolidation would not be surprising.
Present Price: 95.45
Resistances: 95.61 95.91, 96.10, 96.47, 96.67
Supports: 95.30, 94.99, 94.75, 94.52, 94.36
Psychological: 95
Gold’s Rally Cools as the Dollar Strengthens
Gold is dipping back towards $950/oz and our 1st tier downtrend line as both the GBP/USD and EUR/USD contract. Gold managed to propel from our 1st tier uptrend line yesterday in reaction to a rally in U.S. equities along with a deflating Greenback. However, volume is declining on the buy-side while our 3rd tier uptrend and 1st tier downtrend lines reach tier inflection point. We believe this collision could carry some weight since we notice trend inflection points in the GBP/USD, EUR/USD, and USD/JPY as well. Furthermore, volatility is picking up in U.S. equities and the S&P futures are still debating 1000 as crude battles $70/bbl. Therefore, a sizable breakout in either direction over the next few trading sessions wouldn’t be uncalled for considering markets are at a critical juncture.
Meanwhile, investors should continue to monitor developments in both the EUR/USD and GBP/USD since gold has been tightly correlated with these currencies lately. Gold’s psychological $950/oz zone should continue to play a factor for the near-term so long as the precious metal is constrained by our trend lines. Gold still faces our 2nd and 3rd tier downtrend lines along with August 3rd and 7th highs. Meanwhile, the precious metal is being sucked back under the lid of its 7/20-7/28 trading range. Gold has some strong immediate-term technical cushions in our 2nd and 3rd tier uptrend lines along with $950/oz. Consolidation in the precious metal is likely for the immediate-term as investors await more defining global economic data.
Present Price: $956.35/oz
Resistances: $957.74/oz, $958.77/oz, $959.66/oz, $960.94/oz, $962.22/oz
Supports: $956.33/oz, $954.93/oz, $953.77/oz, $952.37/oz, $950.70/oz
Psychological: $950/oz
The S&P Futures Bobble after Disconcerting Data
Today’s attempt to breakout to new 2009 highs has been thwarted thus far by weaker than expected retail sales and weekly unemployment claims numbers. Investors were encouraged by cautiously optimistic words from Bernanke yesterday, though we believe he didn’t provide anything we weren’t expecting. Investors remain generally excited about the global economy recovery, particularly after German and French Prelim GDP numbers swung to growth. However, today’s setback in retail sales and the flat lining present in unemployment claims is tempering optimism since it coincides with a cooling in Chinese data earlier this week. The speed bumps on the road to recovery are capping gains in the S&P futures, and are symptoms of the so-called U-shaped recovery economists have been talking about.
Regardless of today’s setbacks, momentum is sloping higher as the futures look to gravitate beyond 1000. Yesterday’s pop was encouraging because the GBP/USD and EUR/USD participated, exhibiting their positive correlation with U.S. equities. Meanwhile, the GBP/USD, EUR/USD, gold, and the USD/JPY are approaching respective inflection points. This tells us a breakout could be coming in either direction. Since the medium-term uptrend is sturdier than any near-term inclinations to the downside, the breakout would likely be to the topside following further improvements in economic data. However, downtrend inclinations do exist, so investors should keep on their toes and monitor the situation carefully.
The U.S. and the EU will release their CPI data points tomorrow. A solid rise in prices could provide the boost to send the S&P futures beyond previous 2009 highs towards our 2nd tier uptrend line, the futures two barriers to the topside. Meanwhile, the S&P futures have solid cushions to the downside due to the consolidation taking place all month. The 1000 level should continue to play a strong psychological role so long as the S&P is contained by its topside barriers. However, any retracement below August 12th lows and our 1st tier uptrend line on large sell-side volume could result in another step down.
Price: 1007.50
Resistances: 1011, 1016.5
Supports: 1005.75, 1001.5, 997.5, 990.75
Psychological: 1000
Crude Futures Consolidate above $70/bbl as Correlations Rest
Crude futures found support in our 1st tier uptrend line Wednesday as the Dollar weakened and the S&P futures rallied past 1000. Crude managed to avoid any technical pullback in the process, and has climbed back above its psychological $70/bbl level. However, there remains immediate-term downward pressure in the form of previous August highs and our 2nd and 3rd tier downtrend lines. Meanwhile, our 2nd tier downtrend line is colliding with our 2nd tier uptrend line, corresponding with the inflection points taking place in the GBP/USD, EUR/USD, USD/JPY, and gold. Hence, though markets are relatively calm right now, we believe the week could end in volatile fashion. A pop above our 3rd tier downtrend line could result in a quick retest of previous 2009 highs. As for the downside, crude has returned to the safety of its August 3rd-11th trading range. Crude futures also have our 1st tier uptrend line and Wednesday lows to fall back on. Since the EUR/USD, GBP/USD, and S&P futures have more of an upward inclination for the near-term, if there is a breakout in crude we anticipate it could be to the upside.
Investors brushed aside yesterday’s higher than expected weekly crude inventories along with weaker than expected industrial production data out of the EU. Crude futures are also exerting incredible resilience today considering disappointing employment and consumption data normally have a noticeable impact on crude. Crude futures continue to consolidate and strengthen regardless of the data, likely due to the optimistic report from the IEA concerning future demand. The IEA’s positive outlook on global demand counters the cautious report from OPEC earlier this week. Investors are also buying into the concept of a global economic recovery, exhibited by the S&P’s bid to stay above 1000. Therefore, it seems crude is trading more on the global economic outlook than present supply and demand fundamentals. Hence, investors should keep a close eye on the S&P’s behavior around 1000 as well as the Dollars ability to depreciate further against the Euro and Pound.
Price: $71.24/bbl
Resistances: $71.66/bbl $72.03/bbl $72.27/bbl, $72.79/bbl, $73.16/bbl
Supports: $71.09/bbl, $70.60/bbl, $70.18/bbl, $69.79/bbl, $69.26/bbl
Psychological: $70/bbl
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.
EUR/USD Pulls Back Following Encouraging Rebound
The EUR/USD is being denied by our 2nd tier downtrend line after U.S. retail sales and weekly unemployment claims all came in weaker than analysts anticipated. Today’s U.S. data is deflating Wednesday’s rally in reaction to a more upbeat speech from Bernanke following the Fed’s monetary policy meeting. Investors were reassured by Bernanke and ignored weaker than expected industrial production data from the EU. The Dollar’s negative correlation with U.S. equities locked back in after deviating the last few sessions. Investors made an assertive return to risk, yet the EUR/USD didn’t register comparable volume to the upside as it did to the downside last Friday. However, the Euro is exerting some relative strength today after German and French GDP surprised investors by printing positive growth. The EU’s Flash GDP reiterated the improvement by coming in at -0.1% vs. -0.5% expected. Therefore, it appears the EU’s manufacturing hubs, Germany and France, are recovering well despite recent depreciation of the Euro against the Dollar. We believe the improvement in the EU’s economy may be a result of demand from emerging countries such as China, India, and Brazil. Additionally, economic problems in Eastern Europe don’t seem to be having as negative of an impact on the EU region as one might expect.
Today’s GDP news from the EU should be enough to buoy the EUR/USD until tomorrow’s CPI data. An improvement in EU prices couple with stability in the S&P futures would help the EUR/USD hold its ground. Meanwhile, investors should keep an eye on buy-side volume to see whether recent sell-side volume can be countered. Our 2nd tier downtrend line should continue to serve as a reliable immediate-term barrier until we receive more data on Thursday. While the positive correlation between the EUR/USD and the S&P futures seems to be back in place, today’s negative data from the U.S. makes us doubt a serious rally in equities today.
The EUR/USD’s previous pullback this month has created a few barriers to the upside which will need some momentum to overcome. These obstacles include our 2nd and 3rd downtrend line along with August 7th highs. As for the downside, the EUR/USD has technical cushions in our 3rd tier uptrend line and intraday lows. Though today’s pop in the EUR/USD is certainly encouraging, the currency still has something to prove to the topside before we are comfortable with a return to its uptrend.
Present Price: 1.4270
Supports: 1.4274, 1.4262, 1.4241, 1.4216, 1.4200
Resistances: 1.4290, 1.4303, 1.4325, 1.4345, 1.4368
Psychological: 1.40, 1.45
GBP/USD Consolidates after Negative Data from the U.S.
The Cable is gravitating towards our 2nd tier uptrend line, trading well off intraday highs after weaker than expected retail sales and weekly unemployment claims data from the U.S. Meanwhile, it appears the Cable’s positive correlation with U.S. equities is back in play as is the EUR/USD’s. However, despite the GBP/USD’s recent bounce, we haven’t witnessed considerable buy-side volume while two downtrend lines and the psychological 1.70 level bear overhead. Therefore, there remains noticeable near-term downward pressure on the Cable. It seems investors could continue their directional debate with the S&P futures trading back at their highly psychological 1000 zone. We wouldn’t be surprised to see the GBP/USD continue to creep higher towards 1.67 as our 3rd tier uptrend line and 2nd tier downtrend lines approach their inflection point. We recognizing an oncoming inflection point in gold as well, indicating the trading week could end on a volatile note.
Economic data will be quiet on the British front for the remainder of the week, leaving the GBP/USD’s performance dependent on its positive correlation with U.S. equities. Wednesday’s CCC number and Britain’s slight rise in its headline unemployment rate show the rapid improvement in the UK’s labor market is leveling off. Therefore, the Pound could experience relative weakness over the next couple trading sessions, especially if the EU’s CPI data can beat expectations as did today’s GDP releases. Technically speaking, The GBP/USD must confront our 3rd tier and 2nd tier downtrend lines along with the psychological 1.67 level and June 30th highs. As for the downside, the Cable has our 1st and 2nd tier downtrend lines to rely upon along with intraday lows and the highly psychological 1.65 area.
Present Price: 1.6592
Resistances: 1.6611, 1.6632, 1.6648, 1.6665, 1.6702
Supports: 1.6561, 1.6543, 1.6524, 1.6505, 1.6472
Psychological: 1.65
USD/JPY Heads Towards Important Supports
The Yen is continuing its appreciation against the Dollar as investors exercise risk-aversion tactics in reaction to weaker than expected retail sales and employment data. The USD/JPY’s decline coupled with gains in the GBP/USD and EUR/USD indicate investors are exiting the Dollar. Despite the USD/JPY’s present pullback, the currency pair still has important technical cushions in place, including our 1st tier uptrend line and the psychological 95 area. The USD/JPY’s near-term uptrend is intact until these two supports are compromised. Therefore, it will be interesting to see how these supports hold up over the immediate-term. Meanwhile, our 3rd tier downtrend and 1st tier uptrend lines are gradually approaching their inflection point. Hence, the USD/JPY could jog between these trend lines as their collision course nears. We notice inflection points in the rest of currency pairs along with gold. As a result, FX volatility could continue for the next couple trading sessions. On the other hand, the USD/JPY has re-entered a dense trading range, meaning a period of consolidation would not be surprising.
Present Price: 95.45
Resistances: 95.61 95.91, 96.10, 96.47, 96.67
Supports: 95.30, 94.99, 94.75, 94.52, 94.36
Psychological: 95
Gold’s Rally Cools as the Dollar Strengthens
Gold is dipping back towards $950/oz and our 1st tier downtrend line as both the GBP/USD and EUR/USD contract. Gold managed to propel from our 1st tier uptrend line yesterday in reaction to a rally in U.S. equities along with a deflating Greenback. However, volume is declining on the buy-side while our 3rd tier uptrend and 1st tier downtrend lines reach tier inflection point. We believe this collision could carry some weight since we notice trend inflection points in the GBP/USD, EUR/USD, and USD/JPY as well. Furthermore, volatility is picking up in U.S. equities and the S&P futures are still debating 1000 as crude battles $70/bbl. Therefore, a sizable breakout in either direction over the next few trading sessions wouldn’t be uncalled for considering markets are at a critical juncture.
Meanwhile, investors should continue to monitor developments in both the EUR/USD and GBP/USD since gold has been tightly correlated with these currencies lately. Gold’s psychological $950/oz zone should continue to play a factor for the near-term so long as the precious metal is constrained by our trend lines. Gold still faces our 2nd and 3rd tier downtrend lines along with August 3rd and 7th highs. Meanwhile, the precious metal is being sucked back under the lid of its 7/20-7/28 trading range. Gold has some strong immediate-term technical cushions in our 2nd and 3rd tier uptrend lines along with $950/oz. Consolidation in the precious metal is likely for the immediate-term as investors await more defining global economic data.
Present Price: $956.35/oz
Resistances: $957.74/oz, $958.77/oz, $959.66/oz, $960.94/oz, $962.22/oz
Supports: $956.33/oz, $954.93/oz, $953.77/oz, $952.37/oz, $950.70/oz
Psychological: $950/oz
The S&P Futures Bobble after Disconcerting Data
Today’s attempt to breakout to new 2009 highs has been thwarted thus far by weaker than expected retail sales and weekly unemployment claims numbers. Investors were encouraged by cautiously optimistic words from Bernanke yesterday, though we believe he didn’t provide anything we weren’t expecting. Investors remain generally excited about the global economy recovery, particularly after German and French Prelim GDP numbers swung to growth. However, today’s setback in retail sales and the flat lining present in unemployment claims is tempering optimism since it coincides with a cooling in Chinese data earlier this week. The speed bumps on the road to recovery are capping gains in the S&P futures, and are symptoms of the so-called U-shaped recovery economists have been talking about.
Regardless of today’s setbacks, momentum is sloping higher as the futures look to gravitate beyond 1000. Yesterday’s pop was encouraging because the GBP/USD and EUR/USD participated, exhibiting their positive correlation with U.S. equities. Meanwhile, the GBP/USD, EUR/USD, gold, and the USD/JPY are approaching respective inflection points. This tells us a breakout could be coming in either direction. Since the medium-term uptrend is sturdier than any near-term inclinations to the downside, the breakout would likely be to the topside following further improvements in economic data. However, downtrend inclinations do exist, so investors should keep on their toes and monitor the situation carefully.
The U.S. and the EU will release their CPI data points tomorrow. A solid rise in prices could provide the boost to send the S&P futures beyond previous 2009 highs towards our 2nd tier uptrend line, the futures two barriers to the topside. Meanwhile, the S&P futures have solid cushions to the downside due to the consolidation taking place all month. The 1000 level should continue to play a strong psychological role so long as the S&P is contained by its topside barriers. However, any retracement below August 12th lows and our 1st tier uptrend line on large sell-side volume could result in another step down.
Price: 1007.50
Resistances: 1011, 1016.5
Supports: 1005.75, 1001.5, 997.5, 990.75
Psychological: 1000
Crude Futures Consolidate above $70/bbl as Correlations Rest
Crude futures found support in our 1st tier uptrend line Wednesday as the Dollar weakened and the S&P futures rallied past 1000. Crude managed to avoid any technical pullback in the process, and has climbed back above its psychological $70/bbl level. However, there remains immediate-term downward pressure in the form of previous August highs and our 2nd and 3rd tier downtrend lines. Meanwhile, our 2nd tier downtrend line is colliding with our 2nd tier uptrend line, corresponding with the inflection points taking place in the GBP/USD, EUR/USD, USD/JPY, and gold. Hence, though markets are relatively calm right now, we believe the week could end in volatile fashion. A pop above our 3rd tier downtrend line could result in a quick retest of previous 2009 highs. As for the downside, crude has returned to the safety of its August 3rd-11th trading range. Crude futures also have our 1st tier uptrend line and Wednesday lows to fall back on. Since the EUR/USD, GBP/USD, and S&P futures have more of an upward inclination for the near-term, if there is a breakout in crude we anticipate it could be to the upside.
Investors brushed aside yesterday’s higher than expected weekly crude inventories along with weaker than expected industrial production data out of the EU. Crude futures are also exerting incredible resilience today considering disappointing employment and consumption data normally have a noticeable impact on crude. Crude futures continue to consolidate and strengthen regardless of the data, likely due to the optimistic report from the IEA concerning future demand. The IEA’s positive outlook on global demand counters the cautious report from OPEC earlier this week. Investors are also buying into the concept of a global economic recovery, exhibited by the S&P’s bid to stay above 1000. Therefore, it seems crude is trading more on the global economic outlook than present supply and demand fundamentals. Hence, investors should keep a close eye on the S&P’s behavior around 1000 as well as the Dollars ability to depreciate further against the Euro and Pound.
Price: $71.24/bbl
Resistances: $71.66/bbl $72.03/bbl $72.27/bbl, $72.79/bbl, $73.16/bbl
Supports: $71.09/bbl, $70.60/bbl, $70.18/bbl, $69.79/bbl, $69.26/bbl
Psychological: $70/bbl
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.
