Month: November 2009

By Fast Brokers – The EUR/USD managed to bottom out at our 3rd tier uptrend line yesterday despite a pop in sell-side activity in reaction to more negative U.S. economic data.  The EUR/USD continues to trade primarily off of its last important data releases, Friday’s disappointing GDP data points.  However, the EUR/USD is strengthening again today in the face of a surprisingly negative EU Current Account release, indicating an increase in import demand.  Additionally, the U.S. released a set of negative housing numbers combined with slightly positive CPI data.  Regardless of the continuation of negatively mixed data, the Dollar continues to indicate a preference for its downtrend.  We should note that both the EUR/USD and AUD/USD have been strongly correlated with gold this year, yet haven’t participated in the precious metal’s most recent rally past $1100/oz.  Therefore, the EUR/USD may be gaining correlative support from gold, countering the impact from more disappointing EU economic data.  Lastly, the wave of negative U.S. econ data further supports the anticipation that the Fed will maintain a loose monetary policy for the foreseeable future, thereby weighing on the value of the Dollar.  The EU data wire will be relatively quiet until Friday’s German PPI release, meaning the currency pairs immediate-term performance may rest on the performance of U.S. equities and their reaction to tomorrow’s weekly Unemployment Claims release.

Technically speaking, the EUR/USD still faces multiple downtrend lines along with the highly psychological 1.50 level and previous November highs.  However, and a breach beyond our 3rd tire downtrend line could result in a retest of November and October highs with the possibility of more accelerated immediate-term gains.  Unfortunately for bulls, the EUR/USD was negated by our 3rd tier downtrend line and 1.50 on Monday, telling us the 1.50 zone continues to have a psychological impact on the currency pair.  As for the downside, the EUR/USD has built up a solid support system considering the rally since November lows.  Therefore, the EUR/USD has multiple uptrend lines serving as technical cushions along with 11/12 and 10/27 lows.  Meanwhile, investors should keep an eye on the S&P’s interaction with its psychological 1100 level because a topside breakout in the S&P could bring the EUR/USD along for the ride due to their positive correlation.

Present Price: 1.4927

Resistances: 1.4942, 1.4952, 1.4967, 1.4992, 1.5018, 1.5036, 1.5049

Supports: 1.4919, 1.4905, 1.4883, 1.4856, 1.4825, 1.4813

Psychological: 1.50, November Highs and Lows

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor 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.

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.

By Fast Brokers – Gold is continuing its incessant rise higher despite very limited participation from the Dollar.  The EUR/USD and AUD/USD are both fluctuating between their respective uptrend and downtrend lines while the S&P futures hover around their highly psychological 1100 level.  Gold has ignored its usual positive correlations since breaking through its psychological $1100/oz level and seems to have a mind of its own.  Gold’s aggressive bull movements without a sizable depreciation of the Dollar is a bit puzzling.  Therefore, investors should question if/and when gold’s correlations will lock back into place.

Meanwhile, U.S. equities have held up well considering the continual wave of negatively mixed econ data.  Despite today’s slightly positive CPI numbers, both Building Permits and Housing Starts registered disconcerting declines.  Therefore, America’s recent fundamentals are indicating a cool down in the nation’s economic recovery.  Hence, the S&P’s resilience above its highly psychological 1100 level has been impressive.  However, it feels like something’s got to give and investors will eventually need to favor one direction or another in U.S. equities and the Dollar.  Investors should closely monitor the EUR/USD, GBP/USD, and AUD/USD for a directional statement since gold has been more closely correlated to the Dollar than equities so far this year.

Technically speaking, we’re still unable to install a downtrend line on our chart due to a lack of historical perspective.  Therefore, it’s difficult to find any topside technical barriers besides gold’s potentially psychological $1150/oz level.  As for the downside, gold has multiple uptrend lines serving as technical cushions along with 11/17 and 11/16 lows along with the psychological $1100/oz level.

Present Price: $1147.70/oz

Resistances: $1150.09oz, $1152.65/oz

Supports: $1143.05/oz, $1137.60/oz, $1134.71/oz, $1130.54/oz, $1127.24/oz, $1124.27/oz

Psychological: $1150/oz, $1100/oz

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor 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.

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.

By Yan Peters – The GBP/CHF pair provides strong signals for a possible change of trends. The pair is reaching towards a support level at the moment. If the level is breached, the downward move is likely to extend.

• The chart below is the GBP/CHF 4-hour chart by ForexYard.
• The technical indicators used are the Bollinger Bands, the Slow Stochastic, the MACD/OsMA and the Relative Strength Index (RSI).
• The chart provides a very distinct bullish channel. However, the chart is touching its lowest border.
• A bearish cross on the Slow Stochastic has successfully predicted the modest bearish correction that we’re currently experiencing, which led the pair to the 1.6974 level.
• Currently, both the MACD and the RSI are on the verge of indicating a bearish reversal. If the MACD will indeed perform a bearish cross, and the RSI will drop below the 70 line (both marked in red), it will be a string sign for a significant drop.
• There are 3 consecutive support levels that can be observed at the moment. The support levels are placed at the 1.6950, 1.6800 and the 1.6650 prices. If a certain level will be breached, the pair is likely to reach towards the next support level.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Source: ForexYard

Comments by Fed Chairman Ben Bernanke surprised many investors as he joined the rallying cry for a stronger Dollar, which may lead to strength for the USD in the days ahead. On the other hand, the USD still faces downward pressure from sudden spikes in risk appetite following positive news reports as its safe-haven status has not yet diminished. After last week’s drop in consumer confidence, safe-havens like the USD and JPY have begun to regain some of their strength.

Economic News

USD – Bernanke Statements Diminish USD in Short-Term; Strength Ahead?

Following the USD’s minor slide in yesterday’s trading, it appears the greenback has started to regain some of its previously lost ground, but the market is still shaky. The Dollar spent most of yesterday’s trading gaining ground on the EUR and JPY, hitting levels of 1.4807 and 89.52 respectively. By the end of the trading session however, the USD had reversed course and started losing against its primary rivals.

Comments by Fed Chairman Ben Bernanke surprised many investors as he joined the rallying cry for a stronger Dollar, which may lead to strength for the USD in the days ahead. On the other hand, the USD still faces downward pressure from sudden spikes in risk appetite following positive news reports as its safe-haven status has not yet diminished.

As the US prepares to enter its holiday shopping season, retail sales will become a major factor in currency valuation through the last half of November and the entirety of December. Traders should take note of these reports in the weeks ahead as they will drive the market during this time of year.

Looking at today, forex traders have two primary reports from the United States which will be released simultaneously at 13:30 GMT. The first is Building Permits which will reveal the status of a portion of America’s housing sector. The second is the monthly CPI data, which highlights the level of inflation among consumer prices over the previous month. Today may be a volatile trading day due to these reports as well as the release of Britain’s monetary policy statement a few hours earlier.

EUR – EUR Bearish following Consumer Confidence Drop

The 16-nation European currency appeared to be on the downside in recent trading after statements from a number of central bankers called for a strengthening of the US Dollar. Interest rates do not appear to be getting raised by many banks in the nearest future, and this news has helped keep downward pressure on the European currencies while bankers strive to boost economic growth.

The EUR weakened as far as 1.4807 against the greenback, while also dropping below 132.50 against the Yen. This latest weakness may simply be highlighting the return of risk aversion in the market following last week’s drop in consumer confidence and major trade balances.

Britain’s Monetary Policy Committee (MPC) is due to release the Minutes from their recent policy meetings later this morning. Results are expected to show little change from Mervyn King’s statements a week ago regarding steady interest rates and the option for further bond purchases remaining open. Britain’s central bankers have hinted that their economy is not growing as they would like, and measures are being left on the table to combat any additional weakness.

As for other reports today, European Central Bank (ECB) president Jean-Claude Trichet is set to speak at a relatively less significant meeting on insurance and occupational pensions in Frankfurt. While it should not be a volatility-creating event, the possibility remains open for some movement following his statements.

JPY – JPY Gaining from Rising Risk Aversion

With a surge in risk aversion, the JPY appeared to be a growing favorite in recent trading. Climbing as high as 132.44 against the EUR and 82.47 against the AUD following trade liquidation, the Yen may be poised for further strength against these currencies without any significant news to correct this recent behavior.

After last week’s drop in consumer confidence, safe-havens like the USD and JPY have begun to regain some strength. With the holiday season in Europe and the United States approaching, the possibility remains that this strength may drop as investors pull money out of safe-havens to purchase holiday gifts, but this movement may not reflect true market conditions, only short-term cosmetic changes.

Crude Oil – Oil Prices Defy Strengthening USD, Breach $80

The price of Crude Oil climbed back above $80 a barrel in today’s early trading hours despite the sudden rise in USD strength. Speculators view the sudden increase in risk aversion to be a signal that commodity prices will continue rising as a hedge against inflation. Gold prices are still climbing, and even Silver has broken through its significant psychological price level of $18 per ounce.

With commodity prices climbing, Crude Oil appears set to maintain its current price level, with the option to go even higher as the northern hemisphere prepares for the winter months ahead. Supply remains in doubt and demand still appears weak, but speculators continue to assume that oil prices are going to rise which suggests optimism for further industry growth going into 2010. Investors will have to wait and find out if these speculators were right in their assessment.

Technical News

EUR/USD

The hourly chart displays the Relative Strength Index trading in the over bought zone, potentially signaling a downward price movement. The chart’s Bollinger Bands are also tightening, indicating the potential for an imminent breach of the bands. Traders may want to be short on this pair.

GBP/USD

The Cable’s hourly chart shows a move that began from the pair’s lower Bollinger Band and has the potential to climb to its upper Bollinger Band. A limit order to take profit may be preferred at the pair’s upper Bollinger Band price level of 1.6835. This price level may also be preferred to enter the market with an entry limit sell at the same price.

USD/JPY

The USD/JPY 4-hour chart and hourly chart shows a tightening of the pair’s Bollinger Bands, indicating the potential for an imminent breach. The hourly also shows a short term trend that began at the pair’s upper Bollinger Band, crossing the 20 day average line. This run could have the potential to reach the pair’s lower Bollinger Band. Traders may be inclined to take a limit order at 89.08 or enter long at the same price level.

USD/CHF

Yesterday the pair showed bullish strength, touching a significant resistance level of 1.2007 and then reversed course. The hourly chart displays a tightening of the pair’s Bollinger Bands, indicating the potential for an imminent breach. The chart also shows the pair’s Relative Strength Index floating in the oversold zone. This may show the pair could be in for another upward price move. Traders may want to be long on this pair today.

The Wild Card – Gold

Gold touched a new high yesterday of 1143.15, though the charts are showing bearish trends today. The daily chart displays a bearish cross has formed on the commodity’s Slow Stochastic Oscillator, indicating for a potential downward price movement. Further evidence of a potential downward correction could be supported by the pair’s Relative Strength Indicator trading in the overbought zone. This could give commodity and forex traders a reason to go short on gold today.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Market Movers of the Day

Asia-Pacific

RBA meeting minuets

Europe

Swiss adjusted retail sales falling -1.6% YoY

UK Core CPI at 1.8% YoY

UK Retail Sales index falls -0.8% YoY slightly less than consensus

EU trade balance for September strong at €6.8B

Americas

US PPI lower by -1.9% weaker than expected

US Net TIC flows rising to $133.5B

US Industrial production disappointing with a gain of 0.1% MoM

US Capacity utilization at 70.7% rather flat MoM

The Overall Sentiment

Forex

After a rather long period of being under selling pressure the Greenback rebounded across the board largely due to remarks made by the Fed chairman a day before. In what investors consider to be a rather rare occasion the Fed chairman Bernanke commented on the Dollar exchange rate stressing the Fed is alert to the implications of the Dollar’s exchange rate. The Greenback pushed higher a head of the statement only to give back the gains a few minutes later in a rather volatile trade. However a day later as investors were able to spare one more moment of thought to the Chairman’s remarks, counter dollar bets moved to the red across the board with high yielding/commodity currencies retreating the most against. The Euro fell below the 1.49$ level, the Aussie sank below the 93 cents and the Dollar Swiss trade tasted the 1.02 area. The sterling and Yen traded rather flat as the elevated risk aversion supported the Yen and a slightly higher inflation figures in the UK snapped bets debasing(QE) of the sterling will continue by the BoE. The Sterling closed around 1.68$ and the JPY hovered around the 89¥ to the Dollar.

Equities

Wall Street ended the day rather flat as weak industrial production and PPI figures pointed economic weakness in the US. Although the weak data and the Strong Dollar weighed on the US stock market benchmark indexes eventually ended the day in the money. The Dow gained 0.29% and the S&P was up by a modest 1 point. One stock that drew attention was the Oil giant Exxon mobile, Berkshire Heathway the holding company controlled by the investment Guru Warren Buffet disclosed it holds a small number of Exxon Mobile shares, the stock gained close to 1% and closed above 75$.

Commodities

Although the Dollar had a relatively strong Day Commodities held rather well. Gold after reaching a record above 1140$ an ounce retraced a bit but held above 1130$ and silver retreated from 18.5$ but held above the 18$ key level. Oil failed to surge above the 80$ but held above the 79$.

The Day Ahead

In the London session market eyes will be focused on the Bank of England minuets as investors try to extract more on the BoE quantitative easing policy and hence to price the sterling amid weak economic environment on the one hand and sticky inflation on the other.UK industrial data will also gather at least some attention as policy markers seek for the UK industry to recover due to a weaker currency. Later in the day inflation figures from Canada and the US are due with both economies expected to show subdued inflationary pressures especially in the US where the weak Producer price index pointed deflationary pressures are at act rather than inflationary. The concluding data for the day will be the US housing start and building permits with looming worries weak US consumer and high unemployment could hamper the already fragile real estate market, consensus still predicts a rather flat gain MoM but any surprise for the downside could push investors to embrace safe haven bets once again.

Technical Analysis

USD/CHF Daily

Bullish Scenario– A close above 1.035 would signal the pair has broken the flat trend which dominated the pair in recent days and would provide the pair a strong upward momentum.

Target A-1.05

Target B-1.07

Bearish scenario– A break of the 1$ mark would pushed the pair to revisit the all time high around 0.96

Target A– 0.97

Daily Forex Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

By Jeff Reckseit

The following article is provided courtesy of Elliott Wave International (EWI). For more insights that challenge conventional financial wisdom, download EWI’s free 118-page Independent Investor eBook.

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Large banks and more recently pension funds have suddenly become infatuated with gold.  They chant the mantras that gold bugs have known for years: gold is a store of value; owning gold is financial insurance; an ounce of gold will always buy a good suit.  The idea is that if the economy continues to weaken and share prices decline, a strategic allocation of the precious metal will hedge and offset some of the losses in the financial sector.

On the surface it seems to make sense and it’s hard to argue with the logic.  Even so, logic can sometimes get twisted, whereas facts cannot.  The evidence is found in the chart we describe as “All the Same Market.” Gold, stocks, currencies (versus the dollar), oil, grains, meats, softs, all decline in a deflationary environment.  As liquidity dries up and credit contracts, people, businesses, and institutions sell everything to get dollars.  Cash is once again king.  This is bearish for gold.

Looked at another way:  as the dollar advances from its lows, things denominated in dollars lose value against the dollar.  As long as the dollar remains the global senior currency, assets will depreciate:  not just stocks and commodities but residential and commercial property, works of art, collectible cars, pretty much everything.  Of course, this outlook presumes a deflationary environment and that’s been our view for quite some time.  But that’s another conversation.  The topic here is stocks down/gold up – or not.

The long-time editor of the Elliott Wave Financial Forecast Short Term Update, Steven Hochberg summed it up succinctly in a recent issue:

“The other important aspect to a dollar bottom is the implication to all the other markets that have been moving opposite to this senior currency. The start of a major dollar rally should roughly coincide with a turn down in stocks, commodities, oil and the precious metals. So there are likely to be important trend reversals across nearly all major markets.”

Don’t fall into the trap of group-think.  If investing was that easy we’d all have (insert your own private fantasy).

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For more information, download Robert Prechter’s free Independent Investor eBook. The 118-page resource teaches investors to think independently by challenging conventional financial market assumptions.

By Fast Brokers – The USD/JPY is bouncing between our 1st and 2nd tier uptrend lines as investors digest the latest wave of U.S. econ data.  Today’s U.S. data printed negatively mixed once again, with TIC Long-Term Purchases proving to be the only winner.  Meanwhile, investors shouldn’t forget that Japan’s Prelim GDP topped expectations by 5 basis points to kick off the week.  Therefore, one may expect investors to send the USD/JPY lower due to a more favorable outlook for the Yen as compared to the Dollar.  However, the USD/JPY is proving to be resilient above our 1st tier uptrend line since the currency pair is drifting closer to a retracement towards October lows.  Meanwhile, it seems are paying closer attention to the S&P’s ongoing interaction with its highly psychological 1100 level.  The USD/JPY’s correlative behavior has been erratic lately, making this major Dollar cross a tougher read these days.  Regardless, there is still a long-term downtrend at play and our technical cushions are wearing thin.

Technically speaking, the USD/JPY is presently fighting to stay above our 1st and 2nd tier uptrend lines.  Should our 1st tier give way, the currency pair still has 10/2 lows along with October lows serving as technical cushions.  As for the topside, the USD/JPY faces multiple downtrend lines along with the highly psychological 90 level.  Therefore, quite a few topside challenges are in place.  Meanwhile, the U.S. will release CPI and Building Permits data on Wednesday, meaning overall activity in the FX market could pick up.

Present Price: 89.23

Resistances: 89.31, 89.41, 89.54, 89.68, 89.83, 89.89, 90.07

Supports:  89.15, 88.99, 88.85, 88.73, 88.58, 88.44

Psychological: 90, November and October Lows

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor 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.

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.

By Fast Brokers – Gold is pulling back from intraday highs after trading at new record levels just above $1140/oz.  Present weakness stems from a combination of profit taking and broad-based strength in the Dollar.  However, despite today’s slight pullback, there remains little reason to be technically negative on gold due to the lack of historical perspective to the topside.  Investors would likely need to witness significant strength in the Dollar in order to make a noteworthy dent in gold.  After all, gold has proven to be more closely correlated to the Dollar than U.S. equities.  Therefore, investors should keep an eye on current weakness in the EUR/USD and AUD/USD and monitor whether any key supports are taken out in these currency pairs.

Meanwhile, U.S. economic data continues to print negatively mixed, including today’s disappointing PPI data.  The disappointing Core PPI number further supports the Fed’s plan to maintain its loose monetary policy for the foreseeable future.  The Fed’s dovish attitude implies the continuation of a broad-based weakness in the Dollar.  Therefore, gold’s downside movements have been limited today, and the potential for further near-term gains remains.

Technically speaking, we’re still unable to install a downtrend line on our chart due to a lack of historical perspective.  Therefore, it’s difficult to find any topside technical barriers besides gold’s potentially psychological $1150/oz level.  As for the downside, gold has multiple uptrend lines serving as technical cushions along with 11.16 lows and the psychological $1100/oz level.

Present Price: $1131.95/oz

Resistances: $1134.71/oz, $1138.63/oz, $1143.16/oz

Supports: $1127.24/oz, $1124.42/oz, $1122.54/oz, $1117.87/oz, $1114.39/oz, $1111.49/oz

Psychological: $1100/oz., $1150/oz.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor 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.

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.

By Fast Brokers – The Cable is experiencing a little selling pressure after briefly trading beyond November highs.  The Cable added onto gains since our last post as the currency pair followed U.S. equities higher.  Britain re-entered the news wire today with the release of CPI and RPI data.  Both data points printed a basis point hotter than analyst expectations.  As a result, the BoE has gained a little breathing room in regards to its upcoming monetary policy decision by avoiding a movement below 1%.  Meanwhile, the U.S. released PPI data which came in short of analyst expectations.  The most disconcerting number was the -0.6% Core PPI reading (minus food and energy).  The -0.6% number is the weakest since November 2006, indicating the Fed’s alternative liquidity measures haven’t relieved deflationary pressures resulting from a decline in consumption.  Today’s negative pricing data further supports the Fed’s decisions to maintain its loose monetary policy stance for the foreseeable future.

The positive pricing data from Britain combined with weak pricing data from the U.S. would normally lead investors to expect a decline in the Dollar.  However, the Dollar as shown a muted reaction thus far as investors await additional U.S. economic data.  On the other hand, the combination of British and U.S. pricing data is giving the Pound a bit of relative strength, as highlighted by a pullback in the EUR/GBP.  Britain will release its CBI Industrial Order Expectations on Wednesday along with central bank meeting minutes.  Investors will likely be paying close attention to the meeting minutes to see whether there are any hints in regards to the BoE’s outlook for future monetary policy decisions and well as their opinion of the overall economy.

Technically speaking, the Cable’s move beyond our 4th tier downtrend line could prove to be an important near-term move considering the trend line runs through 11/09 highs.  The GBP/USD faces light near-term historical resistance between present price and the psychological 1.70 level.  In fact, we had to trace back to 2003 levels to find more substantial resistances.  Hence, the Cable could be in for more extensive topside movements should fundamentals and U.S. equities cooperate.  However, the Cable has drifted back below 11/09 highs, meaning there’s a potential for downward forces to kick in.  As for the downside, the Cable still has multiple uptrend lines serving as technical cushions along with 11/16 and 11/12 lows.  Furthermore, the psychological 1.65 level could work in the Cable’s favor should conditions deteriorate.

Present Price: 1.6790

Resistances: 1.6808, 1.6828, 1.6849, 1.6875, 1.6896, 1.6913, 1.6935

Supports: 1.6790, 1.6730, 1.6694, 1.6664, 1.6615, 1.6594

Psychological: 1.65, 1.70, November and August Highs, November Lows

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor 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.

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.

By Fast Brokers – The EUR/USD is trading lower this morning as the S&P futures consolidate just above 1100.  The EU is relatively quiet on the data front right now, making the EUR/USD’s present movements more reliant the Dollar’s reaction to upcoming economic data.  Thus far we received slightly better than expected CPI and RPI data from Britain earlier in the session followed by weak PPI numbers from the U.S.  The most disconcerting release was the -0.6% Core PPI reading (minus food and energy).  The -0.6% decline is the largest in the Core number since November 2006.  The setback in producer prices adds onto the sluggish EMI, Business Inventories, and Core Retail Sales data investors received yesterday.  In other words, prices are declining while manufacturing slows and inventories rise, not to mention retail sales minus autos are weak as well.  Hence, the Fed just received more evidence which may support its continued loose monetary policy stance.  As a result, one would expect the Dollar to decline and the EUR/USD to benefit after such news.  However, we will have to wait and see how the rest of today’s data pans out.

Meanwhile, the EUR/GBP is experiencing further downward pressure today as investors continue to disfavor the Euro based off of Friday’s disappointing GDP numbers.  The EU won’t have much data this week to improve investor sentiment besides tomorrow’s Current Account release.  Investors are expecting an account surplus of 0.6 billion Euros.  An optimistic Current Account number could help out the Euro since an increase in exports implies a stronger currency.  The U.S. will release CPI and Building Permits data on Wednesday as well, meaning the Dollar could be in for further volatility.

Technically speaking, the EUR/USD faces multiple downtrend lines along with the highly psychological 1.50 level and previous November highs.  However, and a breach beyond our 3rd tire downtrend line could result in a retest of November and October highs with the possibility of more accelerated immediate-term gains.  Unfortunately for bulls, the EUR/USD was negated by our 3rd tier downtrend line and 1.50 yesterday, telling us the 1.50 zone continues to have a psychological impact on the currency pair.  As for the downside, the EUR/USD has built up a solid support system considering the rally since November lows.  Therefore, the EUR/USD has multiple uptrend lines serving as technical cushions along with 11/12 and 10/27 lows.  Meanwhile, investors should keep an eye on the S&P’s interaction with its psychological 1100 level because a topside breakout in the S&P could bring the EUR/USD along for the ride due to their positive correlation.

Present Price: 1.4886

Resistances: 1.4905, 1.4919, 1.4941, 1.4967, 1.4992, 1.5018

Supports: 1.4883, 1.4856, 1.4827, 1.4813, 1.4792, 1.4770

Psychological: 1.50, November Highs and Lows

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor 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.

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.