Daily Market Commentary
EUR/USD Consolidates Following Friday’s Pop
The EUR/USD is consolidating after logging key gains on Friday. Although the movement wasn’t large pip-wise, the EUR/USD peaked through our 1st-3rd downtrend lines and briefly traded above 12/17 highs. As we mentioned in our previous analysis, our medium-term downtrend line (now our 1st tier) runs through January highs, or the 1.4575 area. Hence, Friday’s gains could signal a more lasting uptrend taking shape. Additionally, our 2nd and 3rd tier downtrend lines run through the 1.39 zone. Therefore, both near-term and medium-term technicals are beginning to work in favor of the EUR/USD. The currency pair has built up a solid base over the past month, creating what could be a solid support system should things go awry. The Cable is in the midst of similar trend setting movements, meaning the risk trade could be a confirmation away from establishing a new near-term uptrend. However, there are some key economic events on deck, so we will have to see whether fundamentals support Friday’s technical breakout. The U.S. will remain in focus today with the Empire Index, Capacity Utilization, Industrial Production, and TIC Long-Term Purchases. If today’s data tacks onto Friday’s encouraging Retail Sales data then the risk trade could receive another top-side boost. Tomorrow the EU will release ZEW Economic Sentiment and CPI. It will be interesting to see whether the recent uptrend in CPI continues. If so this could benefit the Euro since investors may find it hard to rationalize additional liquidity injects from the ECB. The Fed is on deck Tuesday, meaning volatility could really heat up. Investors will be looking to see if there is a change in the central bank’s language regarding its loose monetary policy for the foreseeable future.
Technically speaking, the EUR/USD faces multiple downtrend lines along with 3/12 and 2/9 highs. As for the downside, the EUR/USD has several uptrend lines serving as technical cushions along with 3/12 and 3/10 lows. Meanwhile, the psychological 1.35 area becomes a technical cushion while 1.40 serves as a key psychological barrier.
Present Price: 1.3750
Resistances: 1.3756, 1.3775, 1.3796, 1.3813, 1.3834, 1.3857
Supports: 1.3728, 1.3713, 1.3691, 1.3672, 1.3654, 1.3637
Psychological: March and February Lows, 1.35, 1.40, February highs
GBP/USD Battles with March Highs
The Cable is battling previous March highs set during Friday’s topside breakout. The Cable logged encouraging gains on Friday in the wake of stronger than expected U.S. retail sales data. The improvement in retail sales gave investor more confidence in the global economic recovery and this favored the risk trade. The Cable popped past our previous 1st tier downtrend line in the process, which could prove to be a key movement since our 1st tier ran through 2/23 highs, or the 1.5550 area. We recognized a similar technical breakout in the EUR/USD on Friday, and it will be interesting to see whether these two currency pairs can maintain their upward momentum, though a period of profit taking would not be surprising. Meanwhile, the Cable is distancing itself further from its psychological 1.50 level with near-term topside technical barriers wearing thin. The data wires will heat up as the week progresses, highlighted by the FOMC meeting in Tuesday. The UK will be relatively quiet until Wednesday’s release of the Claimant Count Change along with the BoE’s meeting minutes. Focus could remain on the U.S. today with the release of a data set including, Industrial Production, Capacity Utilization, TIC Long-Term Purchases, and the Empire Index. Investors should continue to keep an eye out for headlines concerning the parliamentary election or cautioning against UK debt levels, since these statements have rocked the Cable in the past. Therefore, potential for another negative shock for the Cable remains regardless of the currency pair’s present upward momentum.
Technically speaking, the Cable has multiple uptrend lines serving as technical cushions along with intraday and 3/12 lows. As for the topside, the Cable faces multiple downtrend lines along with 3/15 and 2/26 highs. Our 1st-3rd downtrend lines gain importance since they run through 2/17 levels, or the 1.58 zone. Meanwhile, the psychological 1.50 area becomes a technical cushion should it be tested.
Present Price: 1.5180
Resistances: 1.5184, 1.5195, 1.5205, 1.5215, 1.5233, 1.5236
Supports: 1.5174, 1.5165, 1.5152, 1.5143, 1.5132, 1.5125
Psychological: 1.50 and March highs 
USD/JPY Consolidates Above 90
The USD/JPY is consolidating above its psychological 90 level after Friday’s wild fluctuations in the wake of U.S. consumption data. Although the USD/JPY popped after stronger than expected Retail Sales figures, the currency pair’s upward momentum was stifled by a disappointing UoM Consumer Sentiment figure. However, the USD/JPY has managed to avoid a retest of 90 in the process and its upward momentum stemming from March lows is still intact. The USD/JPY peaked above our 3rd tier downtrend line on Friday, a development worth mentioning since it runs through 2/22 highs, or the 91.70 level. Hence, the USD/JPY could be in for more near-term gains should U.S. economic data print favorably. Since the BoJ has been more dovish than the Fed, positive U.S. data benefits the USD/JPY due to speculation that the Fed will tighten before the BoJ. That being said, there’s an FOMC meeting on Tuesday and it will be interesting to see whether the central bank makes any adjustments to its monetary policy language. If the Fed should exert a more hawkish stance this could also benefit the USD/JPY. Meanwhile, the U.S. will release a data set today, including the Empire Index, Industrial Production, TIC Long-Term Purchases and the Capacity Utilization Rate. Hence, volatility could pick up as the trading session progresses.
Technically speaking, the USD/JPY faces our new downtrend lines along with 3/12 and 2/17 highs. Meanwhile, the highly psychological 90 area could have an influence over the USD/JPY’s movements for the near-term. As for the downside, the USD/JPY has multiple uptrend lines serving as technical cushions along with 3/15 and 3/9 lows.
Present Price: 90.68
Resistances: 90.69, 90.81, 90.89, 90.95, 91.04, 91.11
Supports: 90.61, 90.54, 90.45, 90.35, 90.29, 90.17
Psychological: 90, March highs 
Gold Retests $1100/oz
Gold is retesting its highly psychological $1100/oz area after Friday’s pullback. Gold experienced another leg down despite pops in the EUR/USD and GBP/USD. These two currency pairs are normally positively correlated with gold, so it’s interesting that gold isn’t behaving according to its usual Dollar correlation. Meanwhile, gold is fighting to hold $1100/oz. Gold did drop below our 2nd tier uptrend line on Friday, a negative development technically since the 2nd tier runs through 2/12 lows, or the $1075/oz . zone. Hence, gold could be in for further weakness over the near-term should the precious metal not overcome some topside technicals quickly. While gold sank below key technical cushions on Friday, the EUR/USD and GBP/USD popped above some important technical barriers. Therefore, it will be interesting to see whether we are witnessed a more lasting shift in correlation. The U.S. will be in focus again today with a thorough data set on the way. However, tomorrow’s Fed meeting will likely capture the spotlight since investors will be watching to see whether the central bank shifts its loose monetary policy stance. The EU will also release its ZEW Economic Sentiment data tomorrow, meaning volatility could pick up in the FX markets over the next 24 hours.
Technically speaking, gold faces multiple downtrend lines along with 3/11and 3/12 highs. As for the downside, gold still has multiple uptrend lines serving as technical cushions, highlighted by our 2nd tier which runs through 2/12 lows. Furthermore, the psychological $1100/oz area could continue to have an influence on gold over the near-term.
Present Price: $1104.50/oz
Resistances: $1105.05, $1106.26, $1108.17/oz, $1109.58/oz, $1110.98/oz, $1112.29/ oz
Supports: $1105.05/oz, $1102.82/oz, $1101.73/oz, $1100.35/oz, $1099.05/oz, $1097.74/oz
Psychological: $1100/oz, $1150/oz, March highs and Lows 
The AUD/USD is drifting lower today as the EUR/USD and Cable pull back following Friday’s topside breakout. While the Aussie’s interest rate differential continues to work in the currency pair’s favor, recent employment and housing related data was disappointing, meaning the RBA could hold off on another rate hike at its next policy meeting unless fundamentals take a turn for the positive soon. With Australia quiet on the data wire this week, investors will likely hone in on upcoming U.S. numbers and the FOMC meeting on Tuesday. Should the Fed make a hawkish alteration to its monetary policy statement this could place some downward pressure on the Aussie over speculation that the Fed could tighten liquidity in the near future. However, should the Fed maintain its loose monetary policy stance for the foreseeable future, the Aussie’s upward momentum could remain intact. Meanwhile, investors will receive a U.S. data set, including the Empire Index, Capacity Utilization, Industrial Production, and TIC long-Term Purchases.
Technically speaking, the Aussie has multiple uptrend lines serving as technical cushions along with 3/11 lows, 3/9lows, and the psychological .90 area. As for the topside, the Aussie has multiple downtrend lines serving as technical barriers along with the psychological .92 area. Additionally, previous 2010 highs could serve as a hefty technical barrier should they be tested.
Price: .9145
Resistances: .9160, .9171, .9186, .9194, .9213, .9227
Supports: .9120, .9104, .9090, .9073, .9052
Psychological: .92, 2010 highs
S&P Futures Trade Back Below 1150 Following Friday’s Breakout
The S&P futures broke free of 1050 and set new 2010 highs on Friday after retail sales data surpassed analyst estimates despite worries that winter weather conditions curtailed consumption. However, the party was cut short by a UoM consumer confidence figure which fell shy of expectations. Regardless, the S&P futures managed to overcome their final key near-term technical barriers. The EUR/USD and Cable each popped past their own key technical barriers on Friday, showing support for a turnaround in the risk trade. However, the Cable is undergoing a hefty selloff today following disconcerting comments from the BoE and concern that a hung parliament may not be able to tackle Britain’s troublesome fiscal situation. It will be interesting to see whether the Cable can settle and lock back into its new uptrend pattern with a U.S. data set on the way. The U.S. will print the Empire Index, Industrial Production, TIC Long-Term Purchases, and Capacity Utilization. More data signaling a pickup in America’s rebound could help the S&P futures curtail intraday losses and head back above 1150. Meanwhile, all eyes are on tomorrow’s FOMC meeting since analysts are eager to see whether the Fed alters its monetary policy language. While a more hawkish monetary stance could weigh on equities, an extension of the Fed’s loose monetary policy for the foreseeable future could prove to be beneficial for equities due to the availability of cheap money for corporations. The EU will also release ZEW Economic Sentiment data along with CPI. Therefore, activity could pick up in equities and FX over the next 24-48 hours.
Technically speaking, the S&P futures are still trading comfortably above our 3rd tier downtrend line, a positive technical statement. However, they are testing 1150 and it will be interesting to see if this key psychological level holds. That being said, the S&P futures face technical barriers in the form of 1050 and previous March/2010 highs. As for the downtrend, the futures have intraday and 3/11 lows serving as technical cushions along with our steep 1st tier uptrend line.
Price: 1146.25
Resistances: 1148.75, 1150.75, 1153.75, 1159.25
Supports: 1146, 1143.25, 1141, 1139.25, 1138, 1135
Psychological: 2010 highs, 1150
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