Daily Market Commentary
EUR/USD Consolidates Following Surge in Current Account
The EUR/USD is holding strong and consolidating above our 3rd tier uptrend line as the currency pair experiences a couple moderately-weighted inflection points. German PPI and the EU’s Current Account data came in well above analyst expectations. Hence, the positive string of data from the EU continues, supporting the EU’s steadfast monetary policy stance. The combination of rising prices and increased demand for EU exports shows the EU’s economy is faring just fine right now, and the 1% benchmark rate seems justified. The EUR/USD’s uptrend is alive and well due to a combination of outperforming global econ data and the ECB’s hawkish stance towards monetary policy. However, we can’t say the same for the Cable. BoE Governor King’s dovish monetary approach is whacking the Pound again, making the Euro a desirable destination for risk-oriented traders. The EUR/GBP supports this observation as the currency pair catapults past .90.
Meanwhile, the EUR/USD could experience continual near-term resistance due to the historical consolidation between December 2008 and September 2008 highs. The currency pair will likely opt to build a new base unless we receive impressive economic news in the immediate-term. Considering Monday and Tuesday will be light on the data front, the next couple trading sessions provide a great opportunity for investors to lock-in some profits ahead of the important EU PMI data releases next Wednesday. The EUR/USD should take its cue from the S&P futures in the meantime, which isn’t necessary a bad thing since it’s difficult to find a reason to be fundamentally negative on U.S. equities right now.
We’ve readjusted our trend lines and still can’t form a downtrend line of substance. Hence, the EUR/USD still has quite a bit of upward mobility despite historical consolidation in this area along with the highly psychological 1.50 level. An eclipse of September 2008 highs would serve as yet another signal that the global economy is on the path to recovery. As for the downside, the EUR/USD has multiple uptrend lines as Wednesday lows to fall back on. The currency pair is separating itself from the psychological 1.45 level, another positive indicate for the EUR/USD trend-wise.
Present Price: 1.4719
Resistances: 1.4741, 1.4772, 1.4800, 1.4822, 1.4841
Supports: 1.4703, 1.4678, 1.4656, 1.4631, 1.4608
Psychological: 1.45, 1.50
GBP/USD Gets Slammed Beneath 1.65
The real sell-off from BoE Governor King’s dovish comments on Tuesday are finally taking their toll today. We’re witnessing the selloff we anticipated considering the downturn the Cable experienced last month following the BoE’s unexpected injection of liquidity. The GBP/USD has collapsed through all of our previous uptrend lines and supports, forcing us to readjust and re-evaluate. The Cable’s decline today is not surprising, yet counters the consolidation occurring in the EUR/USD and gold. The Cable is diverging from its positive correlations from the second time this week, indicating the currency pair’s movements are being determined by factors beyond fundamentals. Investors are pricing in future loose monetary policy from the BoE since it’s clear the central bank is adamant about holding down the Pound. The central bank’s intentions are clearly working; the Pound is depreciating heavily against both the Dollar and Euro. The BoE’s intentions are to make Britain’s service and manufacturing industries more attractive globally. It will be interesting to see how British economic data fares at the end of September since the BoE may be alluding to rough times ahead. Regardless, we expect the Pound’s comparative weakness to continue for the near-term since Britain will not release much economic data next week. Any broad-based strength in the Dollar and weakness in U.S. equities will only exacerbate the Cable’s downturn. However, continued broad-based weakness in the Dollar and strength in U.S. equities would help limit the GBP/USD’s declines.
Technically speaking, the GBP/USD’s decline beneath what is now our 3rd tier uptrend line indicates the currency pair will likely retest September lows in the near future. The downtrend is clearly in the driver’s seat with little technical or fundamental incentive to make a legitimate change of course. However, if the Cable can climb back above our 3rd tier uptrend line, it may at least be able to salvage a respectable level of consolidation. The GBP/USD does have several uptrend lines we can form before we become overly concerned about a more protracted decline. The key will be for the Cable to stay above September lows and the highly psychological 1.60 level should the pullback continue. As for the topside, the Cable faces multiple downtrend lines and the 1.65 level becomes a psychological barrier once again. Since Britain will be quiet on the data-front next week, investors should keep an eye on the EUR/USD and gold for any technically significant movements.
Present Price: 1.6287
Resistances: 1.6303, 1.6324, 1.6335, 1.6348, 1.6375, 1.6396
Supports: 1.6281, 1.6258, 1.6238, 1.6211, 1.6181
Psychological: 1.60, 1.65
USD/JPY Continues its Consolidation Above 90
The USD/JPY has received considerable support at the highly psychological 90 level over the past 48 hours. The DPJ decided to suspend elements of its $164 billion stimulus package today. The government is dead-set on cutting wasteful spending and reducing Japan’s debt burden. While this should lead to a stronger Yen over time, the DPJ’s action is helping the USD/JPY hold steady above 90. Investors believe cutting back on stimulus funding may stymie Japan’s present economic stabilization. Therefore, investors are favoring the U.S. economy over Japan’s today. However, the movement is more of a consolidative pattern and shouldn’t change the USD/JPY’s medium-term downward course regardless of near-term gains. Furthermore, investors should consider the psychological weight of 90. The USD/JPY will not sacrifice 90 easily, and the currency pair will likely need a strong catalyst to drive it below this psychological cushion.
Meanwhile, we’ve readjusted our trend lines to compensate for the USD/JPY’s recent downturn. The currency pair faces four solid downtrend lines to the topside along with 9/9 and 9/7 highs. As for the downside, the USD/JPY has our 1st and 2nd tier uptrend lines along with Wednesday lows and the highly psychological 90 level serving as cushions. Though we have a slightly optimistic outlook on the USD/JPY for the immediate-term, we maintain a negative outlook on the currency pair over the near and medium-term. Japan will have a banking holiday Monday and Tuesday of next week, supportive of our consolidative outlook for the immediate-term.
Present Price: 91.29
Supports: 91.18, 90.96, 90.78, 90.57, 90.26
Resistances: 91.43, 91.65, 91.84, 92.04, 92.24
Psychological: 90
Gold Consolidates above $1000/oz
Gold is consolidating today as anticipated. The precious metal is trading off weekly highs, yet is holding above our 1st tier uptrend line, February 2008 highs, and the highly psychological $1000/oz level. Gold is merely taking a breather after investors snatched up the precious metal in light of the continual selloff in the Dollar. Gold continues to exercise a positive correlation with U.S. equities, so a breach of 1050 in the S&P futures was more than enough of an incentive for investors to rush gold. We find little reason to favor the Dollar nor frown upon U.S. equities over the near-term, thereby giving gold the opportunity to tackle 2008 highs. However, March 2008 highs could still prove to be a challenging immediate-term obstacle should they be encountered. Furthermore, we recognize considerable immediate-term resistance in the EUR/USD at 1.50 and support in the USD/JPY at 90. Investors should disregard the selloff in the GBP/USD for right now since it’s based off of the BoE’s monetary policy approach rather than broad-based fundamentals. Considering the extent of the rally in gold and equities as well as the heavy sell-off in the Dollar, consolidative profit-taking around present levels is not surprising. Furthermore, news will be relatively quiet on the econ data front until the EU releases its wave of PMI data next Wednesday. Hence, investors may take the next couple sessions as an opportune time to continue to lock-in some profits while gold consolidates. Regardless, the medium-term uptrend in gold is alive and well, and we expect March 2008 highs to fail over the near-term.
Present Price: $1009.25/oz
Resistances: $1010.01/oz, $1011.70/oz, $1014.88/oz, $1017.87/oz, $1020.11/oz, $1021.24/oz
Supports: $1008.52/oz, $1006.84/oz, $1005.52/oz, $1002.54/oz, $998.61/oz
Psychological: February and March 2008 highs, $1000/oz.
Disclaimer: FastBrokers' market commentary is provided for information purposes only and under no circumstances should be regarded neither as investment advice or as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained. All materials are property of Fast Trading services, LLC and unless otherwise indicated, any unauthorized reproduction is prohibited.
Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.
EUR/USD Consolidates Following Surge in Current Account
The EUR/USD is holding strong and consolidating above our 3rd tier uptrend line as the currency pair experiences a couple moderately-weighted inflection points. German PPI and the EU’s Current Account data came in well above analyst expectations. Hence, the positive string of data from the EU continues, supporting the EU’s steadfast monetary policy stance. The combination of rising prices and increased demand for EU exports shows the EU’s economy is faring just fine right now, and the 1% benchmark rate seems justified. The EUR/USD’s uptrend is alive and well due to a combination of outperforming global econ data and the ECB’s hawkish stance towards monetary policy. However, we can’t say the same for the Cable. BoE Governor King’s dovish monetary approach is whacking the Pound again, making the Euro a desirable destination for risk-oriented traders. The EUR/GBP supports this observation as the currency pair catapults past .90.
Meanwhile, the EUR/USD could experience continual near-term resistance due to the historical consolidation between December 2008 and September 2008 highs. The currency pair will likely opt to build a new base unless we receive impressive economic news in the immediate-term. Considering Monday and Tuesday will be light on the data front, the next couple trading sessions provide a great opportunity for investors to lock-in some profits ahead of the important EU PMI data releases next Wednesday. The EUR/USD should take its cue from the S&P futures in the meantime, which isn’t necessary a bad thing since it’s difficult to find a reason to be fundamentally negative on U.S. equities right now.
We’ve readjusted our trend lines and still can’t form a downtrend line of substance. Hence, the EUR/USD still has quite a bit of upward mobility despite historical consolidation in this area along with the highly psychological 1.50 level. An eclipse of September 2008 highs would serve as yet another signal that the global economy is on the path to recovery. As for the downside, the EUR/USD has multiple uptrend lines as Wednesday lows to fall back on. The currency pair is separating itself from the psychological 1.45 level, another positive indicate for the EUR/USD trend-wise.
Present Price: 1.4719
Resistances: 1.4741, 1.4772, 1.4800, 1.4822, 1.4841
Supports: 1.4703, 1.4678, 1.4656, 1.4631, 1.4608
Psychological: 1.45, 1.50
GBP/USD Gets Slammed Beneath 1.65
The real sell-off from BoE Governor King’s dovish comments on Tuesday are finally taking their toll today. We’re witnessing the selloff we anticipated considering the downturn the Cable experienced last month following the BoE’s unexpected injection of liquidity. The GBP/USD has collapsed through all of our previous uptrend lines and supports, forcing us to readjust and re-evaluate. The Cable’s decline today is not surprising, yet counters the consolidation occurring in the EUR/USD and gold. The Cable is diverging from its positive correlations from the second time this week, indicating the currency pair’s movements are being determined by factors beyond fundamentals. Investors are pricing in future loose monetary policy from the BoE since it’s clear the central bank is adamant about holding down the Pound. The central bank’s intentions are clearly working; the Pound is depreciating heavily against both the Dollar and Euro. The BoE’s intentions are to make Britain’s service and manufacturing industries more attractive globally. It will be interesting to see how British economic data fares at the end of September since the BoE may be alluding to rough times ahead. Regardless, we expect the Pound’s comparative weakness to continue for the near-term since Britain will not release much economic data next week. Any broad-based strength in the Dollar and weakness in U.S. equities will only exacerbate the Cable’s downturn. However, continued broad-based weakness in the Dollar and strength in U.S. equities would help limit the GBP/USD’s declines.
Technically speaking, the GBP/USD’s decline beneath what is now our 3rd tier uptrend line indicates the currency pair will likely retest September lows in the near future. The downtrend is clearly in the driver’s seat with little technical or fundamental incentive to make a legitimate change of course. However, if the Cable can climb back above our 3rd tier uptrend line, it may at least be able to salvage a respectable level of consolidation. The GBP/USD does have several uptrend lines we can form before we become overly concerned about a more protracted decline. The key will be for the Cable to stay above September lows and the highly psychological 1.60 level should the pullback continue. As for the topside, the Cable faces multiple downtrend lines and the 1.65 level becomes a psychological barrier once again. Since Britain will be quiet on the data-front next week, investors should keep an eye on the EUR/USD and gold for any technically significant movements.
Present Price: 1.6287
Resistances: 1.6303, 1.6324, 1.6335, 1.6348, 1.6375, 1.6396
Supports: 1.6281, 1.6258, 1.6238, 1.6211, 1.6181
Psychological: 1.60, 1.65
USD/JPY Continues its Consolidation Above 90
The USD/JPY has received considerable support at the highly psychological 90 level over the past 48 hours. The DPJ decided to suspend elements of its $164 billion stimulus package today. The government is dead-set on cutting wasteful spending and reducing Japan’s debt burden. While this should lead to a stronger Yen over time, the DPJ’s action is helping the USD/JPY hold steady above 90. Investors believe cutting back on stimulus funding may stymie Japan’s present economic stabilization. Therefore, investors are favoring the U.S. economy over Japan’s today. However, the movement is more of a consolidative pattern and shouldn’t change the USD/JPY’s medium-term downward course regardless of near-term gains. Furthermore, investors should consider the psychological weight of 90. The USD/JPY will not sacrifice 90 easily, and the currency pair will likely need a strong catalyst to drive it below this psychological cushion.
Meanwhile, we’ve readjusted our trend lines to compensate for the USD/JPY’s recent downturn. The currency pair faces four solid downtrend lines to the topside along with 9/9 and 9/7 highs. As for the downside, the USD/JPY has our 1st and 2nd tier uptrend lines along with Wednesday lows and the highly psychological 90 level serving as cushions. Though we have a slightly optimistic outlook on the USD/JPY for the immediate-term, we maintain a negative outlook on the currency pair over the near and medium-term. Japan will have a banking holiday Monday and Tuesday of next week, supportive of our consolidative outlook for the immediate-term.
Present Price: 91.29
Supports: 91.18, 90.96, 90.78, 90.57, 90.26
Resistances: 91.43, 91.65, 91.84, 92.04, 92.24
Psychological: 90
Gold Consolidates above $1000/oz
Gold is consolidating today as anticipated. The precious metal is trading off weekly highs, yet is holding above our 1st tier uptrend line, February 2008 highs, and the highly psychological $1000/oz level. Gold is merely taking a breather after investors snatched up the precious metal in light of the continual selloff in the Dollar. Gold continues to exercise a positive correlation with U.S. equities, so a breach of 1050 in the S&P futures was more than enough of an incentive for investors to rush gold. We find little reason to favor the Dollar nor frown upon U.S. equities over the near-term, thereby giving gold the opportunity to tackle 2008 highs. However, March 2008 highs could still prove to be a challenging immediate-term obstacle should they be encountered. Furthermore, we recognize considerable immediate-term resistance in the EUR/USD at 1.50 and support in the USD/JPY at 90. Investors should disregard the selloff in the GBP/USD for right now since it’s based off of the BoE’s monetary policy approach rather than broad-based fundamentals. Considering the extent of the rally in gold and equities as well as the heavy sell-off in the Dollar, consolidative profit-taking around present levels is not surprising. Furthermore, news will be relatively quiet on the econ data front until the EU releases its wave of PMI data next Wednesday. Hence, investors may take the next couple sessions as an opportune time to continue to lock-in some profits while gold consolidates. Regardless, the medium-term uptrend in gold is alive and well, and we expect March 2008 highs to fail over the near-term.
Present Price: $1009.25/oz
Resistances: $1010.01/oz, $1011.70/oz, $1014.88/oz, $1017.87/oz, $1020.11/oz, $1021.24/oz
Supports: $1008.52/oz, $1006.84/oz, $1005.52/oz, $1002.54/oz, $998.61/oz
Psychological: February and March 2008 highs, $1000/oz.
Disclaimer: FastBrokers' market commentary is provided for information purposes only and under no circumstances should be regarded neither as investment advice or as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained. All materials are property of Fast Trading services, LLC and unless otherwise indicated, any unauthorized reproduction is prohibited.
Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.
