Daily Market Commentary
EUR/USD Fights To Stay Above 3/15 Lows
The EUR/USD has undergone a hefty selloff today amid a rise in uncertainty in the EU region. Word has spread that Germany is reconsidering the option of Greece going to the IMF for financial assistance. Hence, it seems Germany is trying to call Greece’s bluff since the government recently stated that it will head to the IMF if the EU cannot produce an attractive rescue package. Therefore, despite adamant support from France, Germany is still not on board with helping out Greece. The reappearance of uncertainty has delivered a negative psychological blow to the EUR/USD and is resulting in further relative weakness in the Euro, as highlighted by a pullback in the EUR/GBP. That being said, the EUR/USD has managed to stay above 3/15 lows for the time being and the currency pair is still quite a distance away from our key 1st tier downtrend line. However, we will have to monitor how the remainder of the trading session plays out to determine whether the recent uptrend has been snapped. Investors should keep an eye out for our 1st tier downtrend line since it runs through 2010 highs, or the 1.4575 area. The Dollar is showing a mixed reaction to today’s U.S. economic data thus far. Unemployment Claims and CPI printed about in line with analyst expectations while the Current Account and Philly Fed index each came in solid. Hence, today’s data set does have a positive U.S. bias. The EU released Current Account data of its own, which printed far below analyst expectations, signaling that export demand may have stalled. Germany will release its PPI tomorrow along with a public address from Trichet. However, investors will likely be focusing on any new developments regarding Greece’s fiscal situation.
Technically speaking, the EUR/USD faces multiple downtrend lines along with intraday, 3/3, and 3/12 highs. 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: 1.3665
Resistances: 1.3684, 1.3693, 1.3704, 1.3713, 1.3725, 1.3740
Supports: 1.3667, 1.3653, 1.3637, 1.3620, 1.3603, 1.3586
Psychological: March and February Lows, 1.35, 1.40, February highs
GBP/USD Drifts Lower with Risk Trade
The Cable is drifting lower today as the currency pair continues to cool from this week’s impressive topside run. More uncertainty in the EU has had a negative psychological impact on the risk trade as the whole with the Aussie and gold also being dragged lower. However, the Pound is continuing to exert a relative strength, highlighted by further weakness in the EUR/GBP. Yesterday’s surprisingly strong employment data along with slight inflation concerns from the BoE has given investors a reason to be positive about the Pound again despite a dead heat in the parliamentary elections. That being said, the UK does have the potential for negative psychological events of its own, particularly concerning elections and the upcoming budget announcement. Today’s net borrowing data revealed a slight decline, a positive development for a UK government which has accumulated considerable debt. Meanwhile, CBI Industrial Orders declined, reflected the setback we saw in Manufacturing Production last week. Today’s U.S. data was positive mixed with the Philly Index and Current Account data topping expectations while Unemployment Claims and CPI remained relatively flat. The Dollar has shown a mixed reaction thus far, and it will be interesting to see whether the Cable can continue to consolidate regardless of weakness in the Euro. Meanwhile, the Cable is still trading well above our previous downtrend lines, a positive development for the currency pair’s medium-term outlook. However, the Cable must now deal with what is our 3rd tier downtrend line, which runs through 1/28 highs, or the 1.625 area. Tomorrow’s data wire is relatively quiet, meaning currency pairs could follow their respective weekly momentums unless there is another psychological development.
Technically speaking, the Cable has multiple uptrend lines serving as technical cushions along with intraday and 3/17 lows. As for the topside, the Cable faces multiple downtrend lines along with intraday and 3/17 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: 1.5279
Resistances: 1.5288, 1.5318, 1.5334, 1.5354, 1.5377, 1.5397
Supports:15272, 1.5252, 1.5236, 1.5218, 1.5205, 1.5184
Psychological: 1.53, 1.54, March highs 
USD/JPY Recovers From Sizable Intraday Pullback
The USD/JPY is recovering from a hefty intraday pullback which sent the currency pair tumbling below its highly psychological 90 level. There isn’t much news to infer why the USD/JPY experienced such a sizable intraday decline, which leads us to believe the movement could be purely technical. Regardless, the currency pair is back above 90and is strengthening in reaction to the U.S. data set. Today’s U.S. data had a positive bias with the Current Account and Philly Index both topping expectations while Unemployment Claims and CPI remained relatively unchanged. As we mentioned in our previous post, positive U.S. data has the potential to impact the USD/JPY considerably since it gives reason for investors to speculate that the Fed will tighten before the BoJ. The BoJ is still under pressure from the DPJ in regards to fighting deflationary pressures. Hence, positive U.S. data leads investors to favor the Dollar over the Yen due to the Fed’s inclination to have a tighter monetary policy stance down the road. The data wire will be relatively quiet tomorrow, meaning the USD/JPY could opt to stick around its present trading range barring any key psychological developments.
Technically speaking, the USD/JPY faces multiple downtrend lines along with intraday, 3/17, 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 intraday and 3/17 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 and lows 
Gold Declines with Risk Aversion
Gold is pulling back slightly as risk aversion hits the FX markets. Greece has set up a showdown with Germany by giving the EU one week to come up with financial assistance measures before it heads to the IMF for help. Germany has been calling Greece’s bluff by publicly contemplating the possibility of Greece going to the IMF. However, Trichet recently stated that the ECB feels it would be unwise to go this route. In all, the increase in uncertainty has triggered a large selloff in the Euro which is weighing down on gold and leading investors towards the Dollar for safety. However, Gold’s intraday losses have been minimal thus far compared to the pullback in the EUR/USD. Therefore, it will be interesting to see whether the precious metal can continue to hold strong above 3/18 highs and avoid a more sizable downturn in the process. The data wire will be relatively quiet tomorrow, meaning attention could continue to be focused on the EU and any other psychological developments.
Technically speaking, gold faces multiple downtrend lines along with intraday, 3/16and 3/17 highs. As for the downside, gold still has multiple uptrend lines serving as technical cushions along with 3/18 lows and the highly psychological $1100/oz level should it be tested.
Present Price: $1120.20/oz
Resistances: $1120.40, $1121.84, $1122.65/oz, $1124.27/oz, $1125.63/oz, $1127.33/ oz
Supports: $1118.51/oz, $1117.66/oz, $1116.00/oz, $1114.53/oz, $1112.84/oz
Psychological: $1100/oz, $1150/oz, March highs and lows 
AUD/USD Dips with EU Uncertainty
The AUD/USD has dipped back below its psychological .92 level, giving back some of its weekly gains in the process. The Euro is undergoing a heavy selloff in reaction to another psychological flare taking off in the EU. Greece has set the stage for a showdown with Germany by giving the EU one week to come up with sufficient measures for financial assistance before Greece heads to the IMF for help. Uncertainty in the EU and resulted in a broad based Dollar rally, dragging the Aussie and the Cable lower with it. However, losses in the Aussie have been relatively minimal thus far compared to the EUR/USD. The Aussie has been performing comparatively well in general due to the RBA’s tight monetary policy stance amid continual strength in Australia’s economy. However, it remains to be seen whether the Euro’s downturn will spill over further into other major Dollar pairs. Therefore, investors should keep a sharp eye on the Aussie and its interaction with present technical levels. Australia has been quiet on the data front this week, leaving its movements up to broad-based activity in the risk trade. Hence, it will be interesting to see if the Euro can manage to stabilize after today’s hefty selloff and allow the Aussie to remain locked into its uptrend.
Technically speaking, the Aussie multiple downtrend lines serving as technical barriers along with previous March highs. 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, 3/17, and 3/16 lows.
Price: .9192
Resistances: .9196, .9207, .9215, .9229, .9239, .9250
Supports: .9184, .9177, .9171, .9161, .9153, .9139
Psychological: .92, .93, 2010 highs 
S&P Futures Hold Strong Despite Dollar Rally
The S&P futures are holding strong despite today’s broad-based rally in the Dollar. EU uncertainty has returned to the forefront with Greece challenging the EU to come up with reasonable measures of financial assistance within a week. If not, Greece has reiterated that it will head to the IMF for help. Germany called Greece’s bluff earlier by publicly contemplating the possibility of the IMF entering the fray. However, Trichet and the ECB advised against allowing Greece to go to the IMF, so it will be interesting to see how the power struggle plays out. Sarkozy recently stated France’s full support for Greece, meaning Germany is the loudest critic among EU members. The ball is now in Germany’s court and we will have to see how the situation plays out. Regardless, investors should keep an eye on activity in the EUR/USD and monitor whether the currency pair’s decline bleeds into the other major Dollar pairs, most notably the Cable and Aussie. Resilience in the S&P futures is admirable and they are still trading well above 1150 and January highs. Hence, the S&P’s uptrend remains intact for the time being. Equities are likely deriving some of their strength from today’s positively mixed data set. Although Unemployment Claims and CPI printed about in line with analyst expectations, the Current Account and Philly Index each topped estimates. Hence, exports and manufacturing are continuing to pick up, a positive sign for America’s economic recovery. However, unemployment remains a drag on the U.S. economy, indicating the Fed could remain hesitant in tightening liquidity any time soon. The data wire will be relatively quiet across the globe, meaning attention could focus in on the EU and further developments in Greece.
Technically speaking, the S&P 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: 1163
Resistances: 1167.75
Supports: 1162, 1159.25, 1155.75, 1153, 1150.25
Psychological: 2010 highs, 1150, 1175, 1200
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