Daily Market Commentary
EUR/USD Cools After Setting New March Highs
The EUR/USD has eased after breaking through previous March highs during the Asia trading session. The EUR/USD participated in the risk rally stemming from the Fed’s decision to maintain its loose monetary policy for the foreseeable future. The central bank’s continued dovish language prompted a pullback across the board. The EUR/USD also derived some of its upward momentum from Standard & Poor’s removing Greece from its watch list and reaffirmed the country’s BBB+ credit rating in the process. All that being said, the EUR/USD hasn’t logged the type of gains over the past 24 hours as we’ve seen in the Cable and Aussie. The Euro’s relative weakness is highlighted by today’s hefty pullback in the EUR/GBP. The EUR/USD’s upward momentum is likely being restrained by the lack of details provided by the EU’s finance ministers in regards to their plan for extending a lifeline to Greece should the nation’s fiscal situation deteriorate further. Regardless, the EUR/USD did climb through what are now our 1st and 2nd tier downtrend lines, which run through the 1.3950 area. Hence, technicals are beginning to work in favor of the EUR/USD’s medium-term outlook. The EU will be relatively quiet on the data front tomorrow despite the Current Account figure. Therefore, investors will likely remain focused on the U.S. with Chairman Bernanke’s testimony due later today. The U.S. will also release CPI and weekly Unemployment Claims data tomorrow. Should CPI come in light like today’s PPI while Unemployment Claims hover around 450k, this could benefit the risk trade in anticipation that the Fed will continue to pump liquidity into the U.S. economy, thereby weakening the Dollar.
Technically speaking, the EUR/USD faces multiple downtrend lines along with intraday and 3/12 highs. The EUR/USD has separated from our 1st tier downtrend line again, which runs through previous 2010 highs, or the 1.4575 area. Hence, techincals could be pointing in favor of a longer-term uptrend in the making. As for the downside, the EUR/USD has several uptrend lines serving as technical cushions along with 3/15 and 3/10 lows. Meanwhile, the psychological 1.35 area is still serving a technical cushion while 1.40 serves as a key psychological barrier.
Present Price: 1.3762
Resistances: 1.3775, 1.3796, 1.3814, 1.3835, 1.3853, 1.3882
Supports: 1.3756, 1.3736, 1.3725, 1.3713, 1.3695, 1.3670
Psychological: March and February Lows, 1.35, 1.40, February highs
GBP/USD Shoots Higher in the Wake of Strong Employment Data
The Cable has extended yesterday’s rally resulting from the Fed’s decision to maintain its loose monetary policy for the foreseeable future. Investors were speculating about the possibility of an alteration in the Fed’s timeframe for tightening liquidity. Hence, the central bank’s dovish language instigated a rally in the risk trade across the board. After cooling down during today’s Asia trading session, the Cable came to life again after the UK’s Claimant Count Change registered a -32.3k decline, considerably lower than estimates of an 8.2k increase. The shocking improvement in the UK’s unemployment picture countered bearish sentiment concerning weakness in manufacturing and fiscal fears, sending the Cable well beyond its 1.53 level in response. Additionally, MPC meeting minutes revealed some concern about inflation coupled with a unanimous vote to keep QE measures unchanged. The show of concern for inflation implies that the BoE could be reluctant to increase liquidity again, a Cable positive considering there has been considerable speculation that the BoE would loosen. The tide has certainly shifted for the Cable, which has surged well beyond our previous 3rd tier downtrend line. Our 3rd tier runs through February 17 highs, or the 1.58 level. Hence, technical indicators imply that the Cable could have more topside room to explore over the medium term. In the meantime, investors will key in on Bernanke’s testimony before congress during the afternoon. The UK will release Public Sector Net Borrowing tomorrow followed by U.S. CPI, weekly Unemployment Claims, and the Philly Index. Therefore, tomorrow could prove to be another active trading session. Meanwhile, investors should also keep in mind the potential for more negative psychological developments regarding the UK’s troubling fiscal situation.
Technically speaking, the Cable has multiple uptrend lines serving as technical cushions along with intraday lows. As for the topside, the Cable faces multiple downtrend lines along with intraday and 2/25 highs. Our new 3rd tier downtrend line could prove to be a key barometer since it runs through 1/28 highs, or the 1.6275 area.
Present Price: 1.5306
Resistances: 1.5318, 1.5334, 1.5354, 1.5377, 1.5397, 1.5416
Supports: 1.5288, 1.5272, 1.5252, 1.5236, 1.5281, 1.5205
Psychological: 1.53, 1.54, March highs 
USD/JPY Consolidates Despite Risk Trade Breakout
The USD/JPY has stayed range-bound the past 24 hours despite a broad-based breakout in the risk trade. The Fed maintained its dovish monetary policy, resulting in a pullback in the Dollar across the board. Though the USD/JPY did pull back a bit, it held firm after a couple retests of the highly psychological 90 level ahead of the BoJ’s own monetary policy meeting. The BoJ opted to double liquidity designated for bank lending in a sign of good faith for the DPJ’s call to fight deflationary pressures. The BoJ’s liquidity injection coupled with the Fed’s consistent dovish stance has resulted in a sideways moving USD/JPY. Additionally, two members of the BoJ dissented to the central’s bank’s injection, showing all members are not on board for looser liquidity measures in the future. However, should upcoming U.S. economic data outperform the USD/JPY could head higher again since investors would likely speculate that the Fed will tighten before the BoJ. The U.S. will release CPI, Unemployment Claims, and the Philly Fed Index tomorrow. Therefore, investors should keep a sharp eye on the USD/JPY’s reaction to tomorrow’s data points. Bernanke will also testify before congress today, which could have the potential to move the Greenback.
Technically speaking, the USD/JPY faces multiple downtrend lines along with intraday, 3/15, and 3/12 highs. Meanwhile, the highly psychological 90 area could continue to 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 3/16 and 3/9 lows.
Present Price: 90.40
Resistances: 90.45, 90.52, 90.58, 90.63, 90.69, 90.75
Supports: 90.36, 90.29, 90.21, 90.14, 90.08, 90.01
Psychological: 90, March highs 
Gold Yields Following Solid Pop
Gold experienced a solid rally yesterday as the precious metal’s negative correlation with the Dollar kicked back into 1st gear. The Cable, Aussie, and EUR/USD all experienced topside breakouts yesterday in the wake of the Fed’s decision to maintain its loose monetary policy stance for the foreseeable future. Yesterday’s return to the risk trade certain benefitted gold as the precious jumped from $1100/oz and peaked just above $1130/oz and our new 3rd tier downtrend line. Our 3rd tier runs through previous March highs, or the $1145/oz area. Hence, if gold can manage to break past our 3rd tier this could indicate more substantial near-term gains. Meanwhile, investors should keep an eye on the Greenback and monitor the ability of the risk trade to expand on yesterday’s gains. The Cable did break through some key downtrend lines and the Aussie is continuing its steady ascent, creating a favorable correlative environment for gold. Bernanke will testify before congress this afternoon, a potential market mover. Additionally, the U.S. will print a wave of data tomorrow. Hence, activity could pick back up this afternoon and during tomorrow’s U.S. session. Additionally, investors should keep an eye out for any more psychological developments hitting the wire regarding EU and UK fiscal problems since these headlines can jolt currencies as well.
Technically speaking, gold faces multiple downtrend lines along with intraday, 3/5and 3/3 highs. As for the downside, gold still has multiple uptrend lines serving as technical cushions along with intraday, 3/9, and 3/11 lows.
Present Price: $1123.20/oz
Resistances: $1124.29, $1125.52, $1127.77/oz, $1129.41/oz, $1131.05/oz, $1132.48/ oz
Supports: $1121.83/oz, $1120.39/oz, $1118.34/oz, $1116.70/oz, $1114.50/oz, $1112.81/oz
Psychological: $1100/oz, $1150/oz, March highs and lows 
AUD/USD Climbs with Risk Appetite
The Aussie has taken another step higher and is continuing its consistent ascent after the Cable and EUR/USD decided join in on the action yesterday. Both Euro currency pairs experienced sizable breakouts, particularly the Cable, after the Fed decided to keep its loose monetary policy intact. The broad-based risk rally and weakness in the Dollar naturally benefitted the Aussie since the RBA has been one of the biggest hawks around. This week’s breakout in the AUD/USD has gotten the topside momentum going again after relative consolidation into weak employment and housing reports from Australia. That being said, it will be interesting to see if the Aussie can sustain its upward trajectory should Australia’s fundamentals continue to cool. China and the U.S. are in another verbal battle concerning Yuan policy. China is sticking to its guns in regards to keeping the Yuan stable despite calls from the U.S. to appreciate. China’s attitude could prove to be favorable for the Aussie since it helps keep China’s demand for Australia’s commodities stable in the process. Meanwhile, investors will be keying in on Bernanke’s congressional testimony. Additionally, the U.S. will release CPI, Unemployment Claims, and the Philly Index tomorrow. With Australia quiet on the data wire the Aussie could opt to follow its correlation with the risk trade for the remainder of the week.
Technically speaking, the Aussie has our 4th tier downtrend line serving as a technical barrier. Our 4th tier runs through previous 2010 highs and is our last foreseeable downtrend line. Hence, a breakout beyond our 4th tier could signal more substantial topside movements over the near-term. As for the downside, the Aussie has multiple uptrend lines serving as technical cushions along with intraday and 3/16 lows.
Price: .9219
Resistances: .9230, .9239, .9250, .9264, .9276, .9286
Supports: .9213, .9203, .9195, .9186, .9178, .9171
Psychological: .92, .93, 2010 highs 
S&P Futures Drive Higher
The S&P futures are extending yesterday’s topside movement in reaction to the Fed’s continual commitment to a loose monetary policy for the foreseeable future. The concept of more cheap money for a longer period of time provided the catalyst to send the S&P futures well beyond its psychological 1050 level. The overall risk trade joined in as well, with the Cable, Aussie, EUR/USD, and gold all logging sizable gains in the process. Approval from the FX markets further supports yesterday’s equity breakout, signaling the investors are comfortable dipping into riskier currency pairs despite recent fiscal troubles in the EU and UK. Standard and Poor’s ended its credit watch on Greece and affirmed the nation’s BBB+ rating, a positive development psychologically. Additionally, today’s UK employment data printed much better than anticipated, a sign that the global economy is continuing to repair itself. As for the U.S., yesterday’s Building Permits and Housing Starts data all printed in line of expectations while import prices dragged. More importantly, today’s PMI reading came in 4 basis points below analyst expectations, cooling inflation fears in the process. The U.S. will also print CPI tomorrow, providing investors with a more complete pricing picture. Should CPI also come in light this could support the Fed’s loose monetary policy stance. The U.S. will also release weekly Unemployment Claims and the Philly Index tomorrow, meaning equities could be in for another active session. In the meantime, Chairman Bernanke will testify before congress and his statements normally have the potential to move markets.
Technically speaking, has made a strong statement by creating topside separation from its psychological 1050 level and January 2010 highs. We have run out of foreseeable downtrend lines, normally a positive technical development. As for the downside, the futures still have our steep uptrend line serving as a technical cushion along with intraday and 3/15 lows. Furthermore, the psychological 1050 level could serve as a solid support should it be tested.
Price: 1165.50
Resistances: 1167.75
Supports: 1162, 1159.25, 1155.75, 1153, 1150.25
Psychological: 2010 highs, 1150, 1175, 1200
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