Daily Market Commentary
EUR/USD Continues its Consolidation Between our Trend Lines
The EUR/USD is consolidating between our trend lines as they creep towards their respective inflection points. The EUR/USD is trading lower this morning after America’s headline Unemployment Rate came in two basis points higher than analyst expectations. However, the EUR/USD is bouncing off of our 1st tier uptrend line, and it appears the currency pair may opt to stay within the bounds of our trend line trading range. The U.S. markets will be closed on Monday for Labor Day, and trading should be thin today since many traders will take a long weekend.
The S&P futures are trading back above the 1000 mark again. The futures are exhibiting a form of resilience one would expect from such a psychological level. The S&P’s gravitation towards 1000 is preventing the EUR/USD and other major Dollar crosses from breaking out in either direction. Meanwhile, the EUR/USD may stay relatively range bound until market optimists or pessimists win out. Investors are still very uncertain in regards to where the market is headed in the near-term. The S&P futures continue to hover around 1000 despite the fact that many analysts are calling for a modest pullback in equities.
The EU has a relatively light data week ahead and will leave the headlines to the U.S., China and Britain. Next Wednesday and Thursday could prove to be volatile sessions since China will release its Industrial Production data along with a BOE monetary policy decision. It is less certain how the BOE will approach its liquidity program as compared to the ECB. Hence, we could witness a pickup in volatility as the summer comes to a close. Investors will receive Germany Factory Orders on Monday and analysts expect a cool-down in growth from 4.5% to 2%.
Technically speaking, our trend lines are approaching their inflection points. The EUR/USD has interacted properly with our trend lines during its recent consolidation. Hence, we believe the inflection points should mark an increase in volatility. Our 3rd tier uptrend and downtrend lines play the largest trend-setting role on our chart. If our 3rd tier downtrend line fails, we anticipate a retest of August highs. On the flipside, a retracement below our 3rd tier uptrend line could result in a retest of August lows. Meanwhile, the 1.40 and 1.45 psychological patiently wait in opposite directions. Investors should keep a close eye on the S&P futures. If the S&P futures should continue their downward momentum and head below technical supports, the EUR/USD would likely exercise its positive correlation with U.S. equities, and vice versa.
Present Price: 1.4226
Resistances: 1.4246, 1.4266, 1.4287, 1.4301, 1.4326
Supports: 1.4224, 1.4208, 1.4197, 1.4168, 1.4154
Psychological: 1.40, 1.45
GBP/USD Stabilizes above our 3rd Tier Uptrend Line
The GBP/USD is stabilizing further above our 3rd tier uptrend line, yet can manage to break free of our 2nd tier downtrend line. These two trend lines are colliding soon, and we notice multiple inflection points occurring in the EUR/USD. Hence, the two currency pairs are implying there could be a jolt of volatility soon. However, trading should be light today since many traders are taking a long weekend for the Labor Day holiday. Meanwhile, the Pound continues to enjoy a relative strength as the EUR/GBP slides lower. Investors were relieved by the solid Services PMI number yesterday after the weak economic data combined with the BOE’s monetary shock. However, a higher than expected U.S. headline Unemployment Rate is capping movements to the topside. The S&P futures are back above 1000, yet we expect the psychological zone to keep equities in check until there is a technically significant movement in either direction. The S&P’s gravitation towards 1000 is keeping the GBP/USD locked within a reasonable trading range right now.
Britain’s Halifax HPI release was pushed back to Monday, and we expect the data to come in at or above analyst expectations since the UK’s housing market is holding up well. We expect market volatility could increase next week. Although we’ve been chomping at the bit for some volatility, a key technical movement may finally occur with the Labor Day holiday marking the official end of summer. Additionally, we’ll receive some key economic data throughout the week, most notably China’s Industrial Production number and a BOE monetary policy decision on Thursday. There has been a lot of chatter concerning whether China’s economy is slowing down, and the wave of data on Thursday may help clear the air. Meanwhile, investors will be keen to see how the BOE addresses its alternative liquidity program. With inflection points approaching in both the GBP/USD and EUR/USD, the ingredients are on the table to make a volatile week.
Technically speaking, although the GBP/USD has experienced some encouraging strength lately, the currency pair still has our 2nd and 3rd tier downtrend lines to deal with. Our 3rd tier downtrend line is a key for attaining more sizable gains towards 1.65 and August 21st highs. Furthermore, as long as our 3rd tier downtrend line bears overhead a medium-term downtrend line will weigh on the currency pair. A strong downward force remains with analysts cautioning about overbought equity market. Should the S&P futures opt to make a large leg down the GBP/USD would likely follow suit. As for the downside, the GBP/USD has built a little breathing room, most notably our 2nd and 3rd tier uptrend lines and September lows. Additionally, even if our uptrend liens should fail the currency pair has the highly psychological 1.60 level to fall back on. We will have to wait and see how the next week unfolds since it seems investors are content heading into the holiday weekend with a consolidative pattern.
Present Price: 1.6330
Resistances: 1.6360, 1.6376, 1.6408, 1.6443, 1.6469, 1.6520
Supports: 1.6324, 1.6300, 1.6267, 1.6239, 1.6212
Psychological: 1.65, 1.60
USD/JPY’s Bounce Loses Steam
The USD/JPY’s bounce is losing momentum due to inadequate buy-side activity. The USD/JPY failed to close above our 1st tier uptrend line and September highs on the 4-hours while our 2nd tier downtrend line hangs in the distance. Investors were acting on oversold conditions, and rightly so. The psychological impact of the DPJ’s victory is wearing off and attention should return to economic fundamentals. Movements in the EUR/USD and GBP/USD are constrained by consolidation as investors continue to debate the viability of the global economic recovery. Therefore, the USD/JPY may enter a consolidative phase of its own as investors decide where to take the Dollar. Regardless, there remains a strong downward pressure on the USD/JPY. Ultimately, the USD/JPY’s fate will likely depend on the S&P futures. The S&P futures continue to float around 1000 and lack a definite near-term trend. However, once the S&P futures do make a technically significant movement, investors will likely see a comparable response in the USD/JPY, possibly a retracement beneath July lows.
Next week is chalk full of data, including Japan’s Core Machinery Orders on Wednesday and Final GDP on Thursday. Investors will also be paying close attention to the wave of Chinese economic data on Thursday since Japan has been relying on China’s demand for exports. Investors will also receive key economic data from the U.S. along with a BOE monetary policy decision on Thursday. Hence, next week could be a return to volatility with the summer coming to a close, especially since the EUR/USD and GBP/USD are both experiencing multiple trend line inflection points soon.
Present Price: 92.86
Resistances: 92.97, 93.17, 93.33, 93.44, 93.59
Supports: 92.77, 92.68, 92.55, 92.43, 92.27
Psychological: 90, 95
The S&P Futures Shrug Off Unemployment Rate
Investors are brushing aside the higher than expected Unemployment Rate since the number seems to have been priced in by weeks of disappointing Unemployment Claims data. Bulls are fighting to end the summer on a high note as investors get ready for the Labor Day holiday weekend. We recognize a nice pop in both the EUR/USD and GBP/USD while gold trades just under its highly psychological $1000/oz level. Additionally, the 30 Year T-Bond futures are experiencing a sizable pullback. Therefore, the S&P’s correlations are cooperating with the jump in U.S. equities. However, the EUR/USD and GBP/USD face their respective 3rd tier downtrend lines and $1000/oz should prove to be a challenging barrier for gold. Therefore, the S&P futures may not get enough juice to experience a technical breakout to the topside. On the other hand, the futures may look to bounce towards our 1st tier uptrend line, roughly 1% above present price.
Despite today’s encouraging performance in the S&P futures, 1000 should continue to play an important psychological role for the time being. Investors shouldn’t forget the surge in sell-side activity during Tuesday’s pullback. Hence, there remains a noticeable downward pressure since many analysts believe U.S. equities may be overbought. Meanwhile, Our EUR/USD and GBP/USD trend lines are approaching their respective inflection points, indicating the possibility of a period of high volatility. There are certainly enough headlines to warrant such an assumption. Besides the G20 Summit, OPEC Meetings, and a BOE monetary policy decision, we will receive a large wave of economic data from the U.S., Britain and China. Investors will be honing on Thursday since China will be releasing its Trade Balance and Industrial Production data. Uncertainty surrounding the growth rate of the Chinese economy has caused noticeable volatility over the past few weeks. Therefore, investors will be paying particularly close attention to Thursday’s data to see whether the Chinese economy is in fact cooling down as some analysts speculate.
Meanwhile, investors are sitting on the fence waiting for a clear breakout in either direction. Any recent sizable movements have been met by durable supports and resistances, exemplifying investor indecisiveness. We believe the choppy action could continue until we receive clear indicators regarding which direction the economy is headed. Summer doldrums are still in effect, though next week’s economic events could result in a turning point.
Price: 1013
Resistances: 1015, 1024.5, 1030, 1035.5
Supports: 1010.75, 1005, 999.25, 989.75, 982.75
Psychological: 1000
Crude Consolidates Beneath $70/bbl
Crude futures are consolidating beneath $70/bbl and our 2nd tier downtrend line as volume continues to drop off since Tuesday’s sell-off. Meanwhile, the S&P futures are fluctuating around 1000 while the EUR/USD and GBP/USD consolidate. Therefore, investors have had little incentive to send crude into a technical recovery. However, our EUR/USD and GBP/USD trend lines are approaching their respective inflection points. Hence, volatility could return soon considering the flood of new coming in the middle of next week. Of particular importance to crude will be the OPEC meeting and Chinese economic data. Though OPEC is expected to keep production unchanged, activity should increase nonetheless and investors will look for hints concerning OPEC’s expectation for future consumption and production. Additionally, China will release a wave of key data points on Thursday including its Trade Balance and Industrial Production numbers.
China’s importation and consumption of crude has been a major driving force behind crude’s recovery. Therefore, any sizable slowdown in Industrial Production could have a negative psychological impact on crude, and vice versa. Investors will also keep a close watch on the Dollar and U.S. equities. Crude futures should continue to exhibit a negative correlation with the Dollar since a weaker Greenback makes the Dollar-based commodity a more affordable import for foreign countries. Lastly, any significant deviation in the S&P from 1000 should bring crude along for the ride.
Technically speaking, crude made a downtrend statement by sinking below our 1st tier uptrend line on a spike in sell-side activity. However, volume is declining to the downside and crude futures remain comfortably above 7/6 and 7/30 lows. The immediate-term key will be for crude to stay above these lows and our 1st tier downtrend line. As for the topside, crude futures must face our 2nd and 3rd tier downtrend lines and the highly psychological $70/bbl. Therefore, crude will need a large upward movement backed by sizable buy-side volume to turn the tide. Overall, near-term momentum remains to the downside. Although, a week of positive economic events could reverse the momentum quickly.
Price: $67.83/bbl
Resistances: $68.56/bbl, $68.95/bbl, $69.16/bbl, $69.50/bbl, $70.01/bbl
Supports: $67.72/bbl, $67.39/bbl, $66.91/bbl, $66.70/bbl, $66.29/bbl
Psychological: $65/bbl, $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 Continues its Consolidation Between our Trend Lines
The EUR/USD is consolidating between our trend lines as they creep towards their respective inflection points. The EUR/USD is trading lower this morning after America’s headline Unemployment Rate came in two basis points higher than analyst expectations. However, the EUR/USD is bouncing off of our 1st tier uptrend line, and it appears the currency pair may opt to stay within the bounds of our trend line trading range. The U.S. markets will be closed on Monday for Labor Day, and trading should be thin today since many traders will take a long weekend.
The S&P futures are trading back above the 1000 mark again. The futures are exhibiting a form of resilience one would expect from such a psychological level. The S&P’s gravitation towards 1000 is preventing the EUR/USD and other major Dollar crosses from breaking out in either direction. Meanwhile, the EUR/USD may stay relatively range bound until market optimists or pessimists win out. Investors are still very uncertain in regards to where the market is headed in the near-term. The S&P futures continue to hover around 1000 despite the fact that many analysts are calling for a modest pullback in equities.
The EU has a relatively light data week ahead and will leave the headlines to the U.S., China and Britain. Next Wednesday and Thursday could prove to be volatile sessions since China will release its Industrial Production data along with a BOE monetary policy decision. It is less certain how the BOE will approach its liquidity program as compared to the ECB. Hence, we could witness a pickup in volatility as the summer comes to a close. Investors will receive Germany Factory Orders on Monday and analysts expect a cool-down in growth from 4.5% to 2%.
Technically speaking, our trend lines are approaching their inflection points. The EUR/USD has interacted properly with our trend lines during its recent consolidation. Hence, we believe the inflection points should mark an increase in volatility. Our 3rd tier uptrend and downtrend lines play the largest trend-setting role on our chart. If our 3rd tier downtrend line fails, we anticipate a retest of August highs. On the flipside, a retracement below our 3rd tier uptrend line could result in a retest of August lows. Meanwhile, the 1.40 and 1.45 psychological patiently wait in opposite directions. Investors should keep a close eye on the S&P futures. If the S&P futures should continue their downward momentum and head below technical supports, the EUR/USD would likely exercise its positive correlation with U.S. equities, and vice versa.
Present Price: 1.4226
Resistances: 1.4246, 1.4266, 1.4287, 1.4301, 1.4326
Supports: 1.4224, 1.4208, 1.4197, 1.4168, 1.4154
Psychological: 1.40, 1.45
GBP/USD Stabilizes above our 3rd Tier Uptrend Line
The GBP/USD is stabilizing further above our 3rd tier uptrend line, yet can manage to break free of our 2nd tier downtrend line. These two trend lines are colliding soon, and we notice multiple inflection points occurring in the EUR/USD. Hence, the two currency pairs are implying there could be a jolt of volatility soon. However, trading should be light today since many traders are taking a long weekend for the Labor Day holiday. Meanwhile, the Pound continues to enjoy a relative strength as the EUR/GBP slides lower. Investors were relieved by the solid Services PMI number yesterday after the weak economic data combined with the BOE’s monetary shock. However, a higher than expected U.S. headline Unemployment Rate is capping movements to the topside. The S&P futures are back above 1000, yet we expect the psychological zone to keep equities in check until there is a technically significant movement in either direction. The S&P’s gravitation towards 1000 is keeping the GBP/USD locked within a reasonable trading range right now.
Britain’s Halifax HPI release was pushed back to Monday, and we expect the data to come in at or above analyst expectations since the UK’s housing market is holding up well. We expect market volatility could increase next week. Although we’ve been chomping at the bit for some volatility, a key technical movement may finally occur with the Labor Day holiday marking the official end of summer. Additionally, we’ll receive some key economic data throughout the week, most notably China’s Industrial Production number and a BOE monetary policy decision on Thursday. There has been a lot of chatter concerning whether China’s economy is slowing down, and the wave of data on Thursday may help clear the air. Meanwhile, investors will be keen to see how the BOE addresses its alternative liquidity program. With inflection points approaching in both the GBP/USD and EUR/USD, the ingredients are on the table to make a volatile week.
Technically speaking, although the GBP/USD has experienced some encouraging strength lately, the currency pair still has our 2nd and 3rd tier downtrend lines to deal with. Our 3rd tier downtrend line is a key for attaining more sizable gains towards 1.65 and August 21st highs. Furthermore, as long as our 3rd tier downtrend line bears overhead a medium-term downtrend line will weigh on the currency pair. A strong downward force remains with analysts cautioning about overbought equity market. Should the S&P futures opt to make a large leg down the GBP/USD would likely follow suit. As for the downside, the GBP/USD has built a little breathing room, most notably our 2nd and 3rd tier uptrend lines and September lows. Additionally, even if our uptrend liens should fail the currency pair has the highly psychological 1.60 level to fall back on. We will have to wait and see how the next week unfolds since it seems investors are content heading into the holiday weekend with a consolidative pattern.
Present Price: 1.6330
Resistances: 1.6360, 1.6376, 1.6408, 1.6443, 1.6469, 1.6520
Supports: 1.6324, 1.6300, 1.6267, 1.6239, 1.6212
Psychological: 1.65, 1.60
USD/JPY’s Bounce Loses Steam
The USD/JPY’s bounce is losing momentum due to inadequate buy-side activity. The USD/JPY failed to close above our 1st tier uptrend line and September highs on the 4-hours while our 2nd tier downtrend line hangs in the distance. Investors were acting on oversold conditions, and rightly so. The psychological impact of the DPJ’s victory is wearing off and attention should return to economic fundamentals. Movements in the EUR/USD and GBP/USD are constrained by consolidation as investors continue to debate the viability of the global economic recovery. Therefore, the USD/JPY may enter a consolidative phase of its own as investors decide where to take the Dollar. Regardless, there remains a strong downward pressure on the USD/JPY. Ultimately, the USD/JPY’s fate will likely depend on the S&P futures. The S&P futures continue to float around 1000 and lack a definite near-term trend. However, once the S&P futures do make a technically significant movement, investors will likely see a comparable response in the USD/JPY, possibly a retracement beneath July lows.
Next week is chalk full of data, including Japan’s Core Machinery Orders on Wednesday and Final GDP on Thursday. Investors will also be paying close attention to the wave of Chinese economic data on Thursday since Japan has been relying on China’s demand for exports. Investors will also receive key economic data from the U.S. along with a BOE monetary policy decision on Thursday. Hence, next week could be a return to volatility with the summer coming to a close, especially since the EUR/USD and GBP/USD are both experiencing multiple trend line inflection points soon.
Present Price: 92.86
Resistances: 92.97, 93.17, 93.33, 93.44, 93.59
Supports: 92.77, 92.68, 92.55, 92.43, 92.27
Psychological: 90, 95
The S&P Futures Shrug Off Unemployment Rate
Investors are brushing aside the higher than expected Unemployment Rate since the number seems to have been priced in by weeks of disappointing Unemployment Claims data. Bulls are fighting to end the summer on a high note as investors get ready for the Labor Day holiday weekend. We recognize a nice pop in both the EUR/USD and GBP/USD while gold trades just under its highly psychological $1000/oz level. Additionally, the 30 Year T-Bond futures are experiencing a sizable pullback. Therefore, the S&P’s correlations are cooperating with the jump in U.S. equities. However, the EUR/USD and GBP/USD face their respective 3rd tier downtrend lines and $1000/oz should prove to be a challenging barrier for gold. Therefore, the S&P futures may not get enough juice to experience a technical breakout to the topside. On the other hand, the futures may look to bounce towards our 1st tier uptrend line, roughly 1% above present price.
Despite today’s encouraging performance in the S&P futures, 1000 should continue to play an important psychological role for the time being. Investors shouldn’t forget the surge in sell-side activity during Tuesday’s pullback. Hence, there remains a noticeable downward pressure since many analysts believe U.S. equities may be overbought. Meanwhile, Our EUR/USD and GBP/USD trend lines are approaching their respective inflection points, indicating the possibility of a period of high volatility. There are certainly enough headlines to warrant such an assumption. Besides the G20 Summit, OPEC Meetings, and a BOE monetary policy decision, we will receive a large wave of economic data from the U.S., Britain and China. Investors will be honing on Thursday since China will be releasing its Trade Balance and Industrial Production data. Uncertainty surrounding the growth rate of the Chinese economy has caused noticeable volatility over the past few weeks. Therefore, investors will be paying particularly close attention to Thursday’s data to see whether the Chinese economy is in fact cooling down as some analysts speculate.
Meanwhile, investors are sitting on the fence waiting for a clear breakout in either direction. Any recent sizable movements have been met by durable supports and resistances, exemplifying investor indecisiveness. We believe the choppy action could continue until we receive clear indicators regarding which direction the economy is headed. Summer doldrums are still in effect, though next week’s economic events could result in a turning point.
Price: 1013
Resistances: 1015, 1024.5, 1030, 1035.5
Supports: 1010.75, 1005, 999.25, 989.75, 982.75
Psychological: 1000
Crude Consolidates Beneath $70/bbl
Crude futures are consolidating beneath $70/bbl and our 2nd tier downtrend line as volume continues to drop off since Tuesday’s sell-off. Meanwhile, the S&P futures are fluctuating around 1000 while the EUR/USD and GBP/USD consolidate. Therefore, investors have had little incentive to send crude into a technical recovery. However, our EUR/USD and GBP/USD trend lines are approaching their respective inflection points. Hence, volatility could return soon considering the flood of new coming in the middle of next week. Of particular importance to crude will be the OPEC meeting and Chinese economic data. Though OPEC is expected to keep production unchanged, activity should increase nonetheless and investors will look for hints concerning OPEC’s expectation for future consumption and production. Additionally, China will release a wave of key data points on Thursday including its Trade Balance and Industrial Production numbers.
China’s importation and consumption of crude has been a major driving force behind crude’s recovery. Therefore, any sizable slowdown in Industrial Production could have a negative psychological impact on crude, and vice versa. Investors will also keep a close watch on the Dollar and U.S. equities. Crude futures should continue to exhibit a negative correlation with the Dollar since a weaker Greenback makes the Dollar-based commodity a more affordable import for foreign countries. Lastly, any significant deviation in the S&P from 1000 should bring crude along for the ride.
Technically speaking, crude made a downtrend statement by sinking below our 1st tier uptrend line on a spike in sell-side activity. However, volume is declining to the downside and crude futures remain comfortably above 7/6 and 7/30 lows. The immediate-term key will be for crude to stay above these lows and our 1st tier downtrend line. As for the topside, crude futures must face our 2nd and 3rd tier downtrend lines and the highly psychological $70/bbl. Therefore, crude will need a large upward movement backed by sizable buy-side volume to turn the tide. Overall, near-term momentum remains to the downside. Although, a week of positive economic events could reverse the momentum quickly.
Price: $67.83/bbl
Resistances: $68.56/bbl, $68.95/bbl, $69.16/bbl, $69.50/bbl, $70.01/bbl
Supports: $67.72/bbl, $67.39/bbl, $66.91/bbl, $66.70/bbl, $66.29/bbl
Psychological: $65/bbl, $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.
