Daily Market Commentary
EUR/USD Drifts Lower with Light News
The EUR/USD is drifting lower today after the currency pair was unable to break through previous March highs during yesterday’s run higher. The data wire has been relatively quiet the last couple trading sessions, yet investors are opting to retreat from the risk trade regardless. Both Moody’s and Fitch cautioned that the UK’s financials are still not in a healthy position, likely yielding today’s downturn in the risk trade. German Industrial Production printed 5 basis points below analyst expectations, though the result isn’t too bad to get worked up over. Meanwhile, Sarkozy issued a statement defending Greece and implied that the EU will find means of supporting the country if deemed necessary. However, Sarkozy’s vote of confidence hasn’t yielded the kind of impact one may expect on the EUR/USD even if the Euro is outperforming the Pound. The story now becomes whether the EUR/USD can continue to hold above March and February lows despite current selling pressure. The data wire will begin to heat back up during tomorrow’s Asia trading session with China’s New Loans and Trade Balance due. Additionally, the EU will print France’s Industrial Production data. China will likely dominate the headlines and continued strong performance could give the risk trade a jolt to the topside. Meanwhile, the EUR/USD’s focus remains monthly lows and its psychological 1.35 level.
Technically speaking, the EUR/USD faces multiple downtrend lines along with 3/8 and 3/3 highs. As for the downside, the EUR/USD has several uptrend lines serving as technical cushions along with 3/5 and 3/2 lows. Meanwhile, the psychological 1.35 area could continue to have an impact on price movements.
Present Price: 1.3554
Resistances: 1.3557, 1.3574, 1.3589, 1.3606, 1.3619, 1.3654
Supports: 1.3542, 1.3528, 1.3511, 1.3494, 1.3460, 1.3436
Psychological: March and February Lows, 1.35
GBP/USD Fights for a Base Following Hefty Selloff
The Cable is attempting to stabilize right now after dropping below its psychological 1.50 level in the midst of a hefty selloff resulting from weak economic data and cautionary words from Moody’s and Fitch. Yesterday’s RICS number printed well below analyst expectations, confirming last week’s pullback in the Halifax HPI. Additionally, today’s UK Trade Balance figure underwent a discouraging setback to the -8 billion mark, signaling that demand for UK exports is not improving despite broad-based weakness in the Pound. Hence, investors are speculating that the BoE will remain comparatively dovish. However, we’d like to bring back to mind that last week’s UK Services PMI number experienced a sizable pop, an encouraging development considering the nation’s GDP is highly reliant on the services industry. As a result, negativity in the Pound could be a bit overdone. Today Fitch and Moody’s issued statements implying that the UK needs to get its fiscal house in order or face the risk of a downgrade in the nation’s credit rating. Disconcerting comments from the ratings agencies did place additional downward pressure on the Cable, though they aren’t telling us anything investors don’t already know. Keep in mind that the Cable’s selloff in the beginning of March resulted from a poll showing a dead heat in the parliamentary election, raising fear that there will be a deadlock when deciding upon whether to tighten fiscal spending. Hence, the UK’s worrying fiscal situation has been in the headlights for some time now. Although the data wire has been relatively quiet so far this week, it’ll begin to heat up tomorrow with China releasing New Loans and Trade Balance data over the next couple trading sessions. Strong data from China could help out the risk trade, whereas negative data could favor the Dollar. The UK will also release Manufacturing Production data tomorrow, though today’s Trade Balance figure sets the stage for a possible disappointment.
Technically speaking, the Cable has our 1st and 2nd tier uptrend lines serving as technical cushions along with intraday and 3/2 lows. As for the topside, the Cable faces multiple downtrend lines along with 3/3 and 3/8 highs. Meanwhile, the psychological 1.50 area could continue to play a role in the Cable’s near-term movements.
Present Price: 1.4952
Resistances: 1.4960, 1.4975, 1.4987, 1.5007, 1.5024, 1.5036
Supports: 1.4941, 1.4924, 1.4901, 1.4885, 1.4870, 1.4851
Psychological: 1.50, March lows 
USD/JPY Trades Back Below Highly Psychological 90 Level
The USD/JPY is settling following Friday’s impressive run on the heels of better than expected U.S. employment data. The data wire has been relatively quiet since then, allowing investors to lock in profits ahead of key release from China. China will print Trade Balance and New Loans data tomorrow followed by Industrial Production, CPI, and a host of other data due during Thursday’s Asia trading session. Japan will also release Core Machinery Orders tomorrow followed by Final GDP on Thursday. Hence, activity in the USD/JPY could pick up soon after this breather. It will be interesting to see if the currency pair can pick up where it left off on Friday or whether it decides to revert back to the pressures of its downtrend. Weaker than expected data from Japan could help lift the USD/JPY since investors may speculate that the BoJ will be more will to increase liquidity while the Fed stands still amid an improving U.S. economic landscape. On the other hand, weak Japanese economic data could keep the USD/JPY buoyed around its highly psychological 90 area. The 90 level has been a struggle for some time now and there’s little reason to believe this will end tomorrow.
Technically speaking, the USD/JPY still faces multiple downtrend lines along with the highly psychological level and previous March highs. In fact, the USD/JPY still has to deal with February highs should the currency pair experience another near-term topside breakout. Hence, the USD/JPY faces an uphill battle to the topside. As for the downside, the USD/JPY has multiple uptrend lines serving as technical cushions along with intraday and 3/5 lows.
Present Price: 89.79
Resistances: 89.81, 89.90, 90.98, 90.04, 90.11, 90.21
Supports: 89.73, 89.64, 89.56, 89.46, 89.39, 89.31
Psychological: 90, March highs 
Gold Drops Amid Risk Aversion
Gold has tacked onto yesterday’s 1% pullback in reaction to a broad-based downturn in the risk trade. Hence, it seems gold is following its negative correlation with the Dollar once again. On the bright side, gold has avoided a retest of its highly psychological $1100/oz level and remains above the lower band of its trading range. Hence, the possibility of a return of gold’s upward momentum is not out of the question as investors lock in profits over the past couple trading sessions. Much will depend on the Dollar’s reaction to upcoming economic data releases from China over the next couple trading sessions. Strong Chinese data could favor the risk trade and send gold higher, whereas negative data could very well have the opposite effect. Meanwhile, it will be interesting to see of gold can stabilize above its highly psychological $1100/oz level. Additionally, our new 1st tier uptrend line could serve as a key support since it runs through February lows, or the $1090/oz area.
Technically speaking, we’ve formed two new makeshift downtrend lines running through 3/2 and 3/3 levels to give investors an idea of present resistance. Additionally, gold must face previous March highs and the psychological $1050/oz area to the topside. As for the downside, gold still has multiple uptrend lines serving as technical cushions, highlighted by our 1st tier as we mentioned before. Furthermore, gold has the psychological $1100/oz level working in its favor should it be tested.
Present Price: $1113.24/oz
Resistances: $1114.21/oz, $1116.63/oz, $1118.75/oz, $1121.05/ oz, $1123.03/oz, $1124.97/oz
Supports: $1112.11/oz, $1110.07/oz, $1107.26/oz, $1104.71/oz, $1101.73/oz, $1099.20/oz
Psychological: $1100/oz, $1150/oz, January Highs, March highs and Lows 
AUD/USD Marches Higher Despite European Weakness
The Aussie is marching higher after holding strong despite recent weakness in the Pound and Euro. The Aussie continues to outperform due to strong Australian fundamentals and the RBA’s tight monetary policy stance as compared to other central banks. The Aussie is also finding strength after comments from the Fed’s Evans implying that the central bank’s loose monetary policy is here to stay until unemployment improves considerably, which could take quite a while considering how sluggish the U.S. recovery is. Dovish comments from the Fed are benefitting the Aussie due to the interest rate differential with the possibility of future RBA rate hikes down the line. Australia will come into focus again tomorrow with the release of Home Loans data. It will be interesting to see if higher interest rates have weighed on lending. Additionally, investors will receive key economic data from China over the next couple trading sessions. Considering China has been driving Australia’s economic recovery, Chinese economic data could have a noticeable impact on the Aussie. Stronger than expected numbers would likely favor the Aussie’s uptrend, and vice versa. Meanwhile, there has been chatter that China will appreciate the Yuan in the near-future. A stronger Yuan could have a negative impact on the Aussie since demand for Australia’s commodities could take a hit. However, such matters are purely speculation right now and haven’t had much of an impact on the Aussie thus far. The AUD/USD is testing the patience of our 1st and 2nd tier downtrend lines, which run through the .9250 area. Hence, a positive development for the risk trade could yield considerable gains in the Aussie.
Technically speaking, the Aussie has multiple uptrend lines serving as technical cushions along with intraday, 3/4lows, and the psychological .90 area. As for the topside, the Aussie has multiple downtrend lines serving as technical barriers along with March highs and the highly psychological .91 area. Additionally, previous 2010 highs could serve as a hefty technical barrier should they be tested.
Price: .9104
Resistances: .9104, .9120, .9134, .9146, .9160, .9175
Supports: .9083, .9069, .9054, .9038, .9021, .9008
Psychological: .91, .90, March highs and lows 
S&P Futures Battles with our Top Tier Downtrend Line
The S&P futures are presently battling our top tier downtrend line and are trading around key levels as far as the continuation of the uptrend is concerned. Our 3rd tier downtrend line runs through 1/14 highs, meaning a break through could result in an eclipse of previous 2010 highs and the psychological 1050 level. Some technical analysts have warned of a double-top, yet we believe the uptrend is very much in play. In fact, the S&P futures bounced off our very steep uptrend line today, an indication that the futures still have some momentum behind them. Hence, the remainder of this week could prove to be important for the S&P futures as they look to extend their near-term uptrend. That being said, although the U.S. is relatively quiet data-wise until Friday, we’ve got key data points from China on the way. Stronger than expected Chinese economic data could provide the jolt need to push the S&P futures beyond present technical barriers. On the other hand, weak data from China could delay the S&P’s breakpoint until Friday’s U.S. retail sales data. Last week’s U.S. employment data was solid despite the troubling winter weather. Hence, it wouldn’t be surprising if retail sales also come in strong. Encouraging U.S. consumption figures could also provide the spark the S&P futures need to overcome previous 2010 highs. Meanwhile, there remains the potential for another development in fiscally troubled European economies, so investors should keep a sharp eye on the wire.
Technically speaking, the S&P futures have broken through our 2nd downtrend line and only have our 3rd tire remaining, which run through previous 2010 highs. As for the downside, the S&P futures have our 1st tier uptrend line serving as a technical cushion along with 1/20 and 3/3/ lows.
Price: 1139.25
Resistances: 1141, 1143, 1145, 1146.75, 1148.5
Supports: 1137.75, 1135.25, 1133.25, 1131.5, 1128.5
Psychological: 2010 highs, 1150
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