InvestMacro FX

By Fast Brokers

The USD/JPY’s run is fading quickly, backing away from our 2nd tier downtrend line while giving into the heavy downward pressures exerted on price.  Present weakness in the USD/JPY comes after a head-turning 5.2% growth in industrial production, giving investors incentive to appreciate the Yen.  Investors seem to be ignoring the decline in consumer prices and spending.  We have seen improvement in machinery orders, exports, and now industrial production.  Therefore, it seems the drivers of growth are recovering, meaning consumer behavior should improve soon as well.

Interestingly, investors are showing preference for the Yen vs. the Dollar, meaning the Japanese economy and balance sheet may be in better shape than America’s.  We notice the broad-based depreciation of the Dollar.  Now that the global economy is stabilizing, the U.S. will have to deal with the ramifications of its extraordinary injection of liquidity.  Unfortunately for Japan, the longer the Yen trades at an elevated valuation against the Dollar, the longer exports to the U.S. will be hampered.

We can tell you that not much has changed fundamentally for the USD/JPY.  Though Thursday’s gains came on rising volume, total volume was nothing to brag about.  The currency pair is declining back towards our 1st tier downtrend line with 4 more downtrend lines bearing overhead, not to mention the highly psychological 100 level resting well out of reach.  Therefore, we maintain our bearish outlook trend-wise on the USD/JPY.  Bulls have their work cut out for them.  The first key to the uptrend will be holding our 2nd tier uptrend line.  If this line of defense doesn’t hold, we could see the present pullback pick up speed.

Fundamentally, we find resistances of 96.33, 96.90, 97.45, 97.98, and 98.69.  To the downside, we see supports of 95.82, 95.12, 94.43, 93.77, and 92.65.  The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion.  The USD/JPY is currently exchanging at 95.80.

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 finally made the bull move investors were waiting for, catapulting from our trend line inflection points while leaving the psychological $950/oz level behind.  Though the rise of gold has been incredible over the last 24 hours, movement has come on declining volume, meaning the precious metal could top out soon.  Regardless, previous May highs have been broken and a retest of the key $1000/oz seems imminent.  Gold’s breakout comes with high flying crude futures, signaling inflation could be on the way.  Since gold has exhibited a positive correlation with equities as of late.  Therefore, gold’s impressive gains could be signaling a breakout in the S&P futures.  Though we’re bullish on gold fundamentally, there are obviously a few more downtrend lines to deal with and $1000/oz, so there could be a rough road ahead.

Fundamentally we find resistances of $975.81/oz, $978.11/oz, $980.56/oz, $983.25/oz and $987.29/oz.  To the downside, we see supports of $971.86/oz, $969.29/oz, $965.98/oz, $963.28/oz, and $961.45/oz. Gold is currently trading at $974.90/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.

Source: ForexYard

Today, traders are advised to follow constant daily development coming out of the U.S. economy, such as the release of Prelim GDP figure. This indicator might provide for extreme market volatility in the major currency pairs. Traders may find good opportunities to enter the market following this vital announcement at 12:30 GMT.

Economic News

USD – GDP Report on Tap – Will USD Weakness Continue?

The U.S. Dollar traded weakly in yesterday’s session as it witnessed depreciation against all of its currency rivals. Plunging toward the critical levels of 1.4000 against the EUR and 1.6000 against the GBP, the greenback’s recent weakness doesn’t appear to have an end in sight for today.

With an expectant worry that today’s data releases will put investor focus on America’s increase in debt issuance, thus resulting in a higher Treasury yield; the market may continue to go bearish on the USD. As expected, higher yielding assets and currencies like the EUR and GBP may then gain significantly from these speculations. Positive economic data in Europe throughout the week has also resulted in dramatic investment shifts towards a diversified portfolio for many traders who wish to increase their risk and pull away from safe-haven investments.

Looking forward to today, forex traders will no doubt be marking the multitude of European data releases as Britain’s HPI housing report may show a sudden return to market weakness, and the Euro-Zone’s M3 money supply report has the potential of showing a drop in the level of currency available throughout the European forex market. In the United States, the Preliminary GDP report is scheduled to be released at 12:30 GMT and may show the U.S. economy shrinking less than last quarter, a sign that the economy could be entering a solid recovery. With a focus on America’s debt issuance, USD weakness is anticipated to continue throughout the end of the week.

EUR – EUR’s Recent Gains on Unsteady Ground

The EUR has been the beneficiary of the market’s recent increase in risk appetite considering it has appreciated against almost all of its currency rivals over the past week. The 16-nation currency climbed towards the psychological barrier of 1.4000 against the USD, temporarily breaching the resistance line before falling back under the mark. With the recent dash to sell off the JPY, the EUR apparently received the bulk of investor flight, climbing as high as 135.40 against the island currency.

With the surge of consumer confidence in some of Europe’s largest economies, there exists a moderate level of hope in a speedy recovery for the Euro-Zone’s regional economy. German market data has displayed a wide array of positive results which have helped convince many weary traders that the worst may indeed be over. In a rush to diversify trading portfolios for riskier assets, the EUR appears to have been one of the primary choices for this move. The question remains, however, as to whether this move towards Europe will continue. Some analysts say it marks the beginning of a recovery, but will not sustain itself at this pace in the short-term.

As for today, there are two important data releases which forex traders need to keep an eye on. The first is the Nationwide HPI report in Britain which may show the housing market declining once more. This report is scheduled to be released at 6:00 GMT. The second is the report on the M3 money supply in circulation throughout the Euro-Zone. With a direct correlation to interest rates, the money supply is an important gauge of currency valuation. With negative results, we could see a temporary reversal to the EUR’s recent trends through the end of today’s trading.

JPY – JPY-Funded Carry Trades Returning?

The Japanese Yen saw one of its most bearish sessions in months. Dropping back towards the 97.00 level against the USD, and the 155.00 level against the GBP, the island currency witnessed a rash sell-off in Thursday’s mid-day trading sessions. There was a growing concern that Japanese equities were more resilient than previously forecast which led to an increase in risk appetite for many safe-haven investors. This generated an investment flight towards Europe in search of higher yielding assets. Some analysts believe the JPY-funded carry trade may be on the return, which will eventually push the value of the Yen towards the lows of 2007-2008.

As for today, there aren’t many data releases expected from Japan. However, last night’s consumer pricing reports indicated a decrease in price for Japanese goods and services, highlighting a weakened demand for these sectors of Japan’s economy. This may also have generated a strengthened push to flee from JPY safe-haven investments. Unless news from the Euro-Zone or U.S. comes out highly negative throughout the day, the JPY will likely continue getting weaker.

Crude Oil – Crude Oil Price Meets Little Resistance

After climbing to a record high not seen since November, the price of Crude Oil has stabilized for the moment. With a sudden flight from safe-haven investments such as the JPY and USD, commodity prices appeared to gain a strong boost from the weakness of the Dollar. Crude Oil spiked to the price of $65 a barrel in mid-day trading yesterday. Only in today’s early trading hours did the price begin to settle just under this price barrier.

The Organization of Petroleum Exporting Countries (OPEC) agreed not to change production levels for the time being, with the assumption that doing so may destabilize weakened economies. A report showing a sharp decline in oil inventories also supported this move as a boost to demand and consumption is expected in the coming weeks. With this information in mind, forex traders may understand that long-term pressure continues to show upward momentum, meaning the price of oil may continue on up towards $75 a barrel in the coming months.

Technical News

EUR/USD

The bullish trend is loosing its steam and the pair seems to consolidate around the 1.3980 level. The pair currently sits near the upper border of the daily chart’s RSI, suggesting a downward correction may be imminent. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

GBP/USD

The 4-hour chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the daily Chart’s RSI is already floating in the overbought territory indicating that a bearish correction might take place in the nearest future. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

USD/JPY

There is a fresh bearish cross forming on the daily chart’s Slow Stochastic indicating a bearish correction might take place in the nearest future. The downward direction on the 4-hour chart’s Momentum oscillator also supports this notion. When the downward breach occurs, going short with tight stops appears to be preferable strategy.

USD/CHF

The pair has been range-trading for a while now, with no specific direction. The Daily chart’s Slow Stochastic providing us with mixed signals. The 4-hour charts do not provide a clear direction as well. Waiting for a clearer sign on the hourlies chart might be a good strategy today.

The Wild Card – Crude Oil

Crude Oil prices rose significantly in the last two weeks and peaked at $65.30 per barrel. However, the daily chart’s RSI is floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.

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.

By GCI Fx Research

€

The euro strengthened vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3980 level and was supported around the US$ 1.3790 level.  The common currency recovered from intraday losses that were prompted by a decent U.S. durable goods report that saw April headlne durable goods orders up 1.9%.  Other data saw the Chicago Midwest manufacturing index decline 1.1% in April while April new home sales increased marginally, up 0.3% in April to an annualized 352,000 level.  On a yearly basis, new home sales were down 34.0% y/y.  The uptick in nonthly housing sales activity represented the second time in three months the housing market improved and could signal a reversal in the fate of the beleaguered housing industry.  Additionally, weekly initial jobless claims fell to 623,000 while continuing jobless claims continued to move higher.  In eurozone news, European Central Bank member Constancio said policymakers have not made any decision about additional interest rate cuts.  Data released in the eurozone today EMU-16 May economic confidence improve to 69.3 while German April plant, machinery orders were off a real 58% y/y.  Moreover, German May unemployment ticked lower to 8.2% from 8.3% and the April ILO unemployment rate increased to 7.7%.  Finally, the EMU-16 April leading indicator was up +1.8%.  Euro bids are cited around the US$ 1.3435 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥97.25 level and was supported around the ¥95.20 level.  Today’s intraday high represented the pair’s strongest showing since 12 May.  Traders are citing real-world money flows as one reason why the yen has been declining as Japanese investors are said to be getting long foreign bonds.  Data released in Japan overnight saw April retail sales decline for the eighth consecutive month, off 2.9% y/y, while overall retail sales were off a revised 3.9% in March following February’s 5.7% pullback.  The Nikkei 225 yesterday stock index gained 0.13% to close at ¥9,451.39.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥135.25 level and was supported around the ¥131.70 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥154.90 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥89.45 level. In Chinese news, U.S. Treasury Secretary Geithner will visit China this weekend and will meet with top Chinese officials early next week.  Treasury officials said the Obama administration is “attuned to the interests of our investors and plan to listen closely to what they have to say.” The Chinese government has recently been critical of the effects of U.S. policy and how they impact the value of China’s massive foreign reserves, about 70% of which are said to be denominated in U.S. dollars.  The Treasury also said the “U.S. dollar will continue to play a very important role for a very long time.”

₤

The British pound came off vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.5850 level and was capped around the $1.6015 level.  Data released in the U.K. today saw April CBI retail sales fall with the retail sales balance lower at -17 in May from +3 in April.  Bank of England Deputy Governor Bean said the central bank is trying to improve access to financing for small to medium-sized businesses.  Cable bids are cited around the US$ 1.5535 level.  The euro appreciated vis-à-vis the British pound as the single currency tested offers around the ₤0.8765 level and was supported around the ₤0.8655 level.

Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

By CountingPips.com

U.S. durable goods orders increased more than expected in April after falling in March according to a report released by the U.S. Commerce Department today. Durable goods orders in the United States advanced by 1.9 percent in April to a total of $161.5 billion after declining by a revised 2.1 percent in March. Durable goods sales had rebounded in February after falling for six straight months. Today’s data beat market forecasts that had been expecting that durable goods orders would increase by approximately 0.5 percent for the month.

New orders for durable goods excluding transportation gained by 0.8 percent in April following a revised decrease of 2.7 percent in March. Market forecasts were predicting a decrease of 0.3 percent in durable goods minus transportation.

Shipments of durable goods decreased in April by 0.3 percent and fell for the ninth straight month. Unfilled orders decreased 1.2 percent in the month while durable good inventories decreased by 0.8 percent and have now declined for four straight months. March nondefense orders for new goods fell by 2.0 percent while defense orders for capital goods rose by 23.2 percent.

U.S. New Home Sales edge up in April.

New Home Sales in the United States gained slightly in the month of April according to data released by the Department of Commerce today. Purchases of new single family homes rose to an annual rate of 352,000 in April, a 0.3 percent advancement following March’s 3.0 percent revised decrease in sales. April’s annual rate of new homes sold, despite the increase, is still 34.0 percent lower than the April 2008 level.

April’s results were worse than market forecasts which were expecting a 1.1 percent increase in sales for the month for an annual rate of 360,000 new homes sold. The median sales price of new homes in April fell by 15 percent on an annual basis to $209,700 while the average sales price came in at $254,000.

Also released out of the U.S. today was the weekly jobless claims report by the Department of Labor and the report showed that jobless claims fell by 13,000 workers in the week that ended May 23rd. This was the second week in a row jobless claims fell and the data beat market forecasts that were expecting to see 628,000 claims.  Continuing jobless claims continued to rise and marked a new record high with 6,788,000 claims for the week ending May 16th. This was 110,000 above the previous week and was worse than forecasts were expecting.

US Dollar mixed in Forex Trading today.

The U.S. dollar has been mixed today in forex trading against the other major currencies. The dollar has been higher versus the Japanese yen and the British pound while falling against the euro,  Australian dollar, New Zealand dollar, Canadian dollar and the Swiss franc.

The euro has climbed higher versus the dollar today as the EUR/USD has gone from its 1.3819 opening(00:00 GMT) to trading at 1.3915 in the afternoon of the U.S. trading session at 12:55pm EST according to currency data from Oanda.

The British pound has fallen today as the GBP/USD has declined from its 1.5906 opening exchange rate to trading at 1.5979 usd per gbp. The dollar has gained versus the Japanese yen and trading at 96.96 after opening at the day at the 96.24 exchange rate.

The dollar has lost ground today versus the Canadian loonie as the USD/CAD trades at the exchange rate of 1.1180 after opening the day at 1.1228.

The dollar has declined against the Swiss franc as the USD/CHF trades at 1.0864 after opening at 1.0937 today while the dollar has also been weaker against the Australian dollar and New Zealand dollar. The AUD/USD trades at 0.7802 after a 0.7768 opening while the NZD/USD trades at 0.6210 today after opening at the exchange rate of 0.6130.

GBP/USD Chart – The British Pound falling today versus the US dollar in forex trading after gaining for the last seven out of eight days.

By Fast Brokers

The EUR/USD is recovering some of yesterday’s losses incurred from the selloff in U.S. equities.  The currency pair is re-approaching our 1st tier uptrend line after Germany’s unemployment change number came in much better than expected.  The fact unemployment change has exited the 40k-60k range is very encouraging for the EU and creates a sense of normalcy in the employment market. Today’s release tags onto the positive current account data we saw yesterday, and the PMI and economic sentiment numbers from last week.  Therefore, economic data continues its upward trend for the most part, encouraging investors the global economy is stabilizing.  Recent economic data highlights our belief that the EUR/USD’s present pullback as a result of overbought conditions combined with a hesitation at the psychological 1.40 level.  Therefore, the EUR/USD could experience a solid rally today if America’s durable goods orders and new home sales numbers exceed expectations.

The EUR/USD remains in a bullish trend with the next natural obstacles being previous May highs and 1.40.  If the currency pair can climb past these obstacles, we could see a solid near-term pop towards the 1.43 area.  However, the EUR/USD has its work cut out for it as our trend lines crawl towards their inflection point, which will likely be reached before week’s end.  Therefore, we anticipate further consolidation until our trend lines collide followed by a strong directional move.  Despite our bullish outlook, yesterday’s solid volume on a down-bar is a disconcerting, and makes us a little wary.  Additionally, the inconsistent performance of the S&P has cast a shadow of a doubt on present equity valuations.  Therefore, if U.S. equities should falter, the EUR/USD would likely exercise its positive correlation and follow suit.  If the EUR/USD should continue its decline, May 21 lows serve as an important support area.  Regardless of the near-term uncertainty, we maintain our bullish outlook trend wise until further notice.

Fundamentally, we find resistances of 1.3899, 1.3922, 1.3958, 1.3991, and 1.4024.  To the downside, we see supports of 1.3847, 1.3807, 1.3756, 1.3732, and 1.3659.  The 1.35 area serves as a psychological cushion with 1.40 acting as a psychological barrier.  The EUR/USD is currently exchanging at 1.3889.

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 weakened with U.S. equities yesterday, exercising its positive correlation with the S&P futures as investors locked in gains at the highly psychological 1.60 level.  Today’s CBI realized sales number was a little disappointing, as was yesterday’s BBA mortgage approvals.  Therefore, the optimism surrounding a recovery in consumption and housing has been dented.  Regardless, all-around economic data from Britain remains on the upswing until we see significant drawbacks across the board.  Hence, the Cable remains in a bullish trend, although it may experience relative weakness as compared to its European counterpart, reflected by a stabilizing EUR/GBP.

Our 2nd tier downtrend line is a critical obstacle since it stretches back to July 2008 highs, forming our last foreseeable blockade for the medium-term.  Hence, even though the Cable’s near-term gains have been impressive, we could witness even more exciting movements to the upside if the currency pair can clear the 2nd tier.  Due to the significance of present levels, we wouldn’t be surprised to experience continued hesitation around 1.60 as investors debate leaving the key resistance behind.  Meanwhile, the GBP/USD is building up a solid base between 1.5822 and 1.5988, which could serve as a reliable defense should the currency leap above 1.60.  We advise keeping a close eye on volume over the next couple sessions.  A large up-bar backed by considerable volume could indicate a forthcoming breakout.

All eyes will be on U.S. equity markets and their reaction to incoming economic data and Treasury bill auctions.  As with the EUR/USD, the inconsistent performance of the S&P serves as a negative counterpunch to the optimistic fundamentals exhibited by the Cable.  However, if the S&P can manage to shake loose of 900 and make a fundamental move to the upside this would likely push both the GBP/USD and the EUR/USD beyond their respective barriers.  We maintain our bullish outlook on the GBP/USD trend-wise until further notice.

Fundamentally, we find resistances of 1.5988, 1.6062, 1.6129, 1.6233, and 1.6307.  To the downside, we see supports of 1.5988, 1.5899, 1.5822, 1.5727, and 1.5662.  The GBP/USD is currently exchanging at 1.5953.

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 USD/JPY is making an encouraging move to the upside, running past our 1st tier downtrend line after Japan announced an asset deficit of roughly $6.61 billion.  In other words, domestic investors purchased an excess of $6.61 worth of foreign assets, likely participating in the large U.S. Treasury auctions.  This news indicates a boost in supply of the Yen, and is weakening the Japanese currency against equal interest bearing currencies such as the Dollar.   In addition to the asset purchase news, Japan reported a retail sales number 3 basis points above analyst expectations.  Therefore, consumption of retail goods continues to climb back towards reasonable levels, showing consumer confidence is on the rise with the employment market stabilizing.

It will be interesting to see if today’s pop in the USD/JPY receives significant volume.  The currency pair faces several downtrend lines to the upside and will need considerable momentum to piece together a fundamental move.  We can’t forget that Tuesday’s trade balance was far below analyst expectations, painting a mixed picture of the Japanese economy.  Considering the downward forces bearing down on price, we maintain our bearish outlook on the USD/JPY until we witness a fundamental shift to the upside.  One thing is for certain, today’s move is encouraging and brushes aside the topic of a rapidly appreciating Yen for the time being.

Fundamentally, we find resistances of 96.90, 97.45, 97.98, 98.59, and 99.25.  To the downside, we see supports of 96.33, 95.82, 95.12, 94.43, and 93.77.  The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion.  The USD/JPY is currently exchanging at 96.84.

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 continues its stabilization, balancing along the highly psychological $950/oz level.  Our resistance and support levels are fairly tight as the S&P battles its demons at 900, meaning consolidation could continue for the immediate-term.  Meanwhile, gold is building a new base which can serve as solid support in the future.  Our 2nd and 3rd tier uptrend and downtrend lines reached an inflection point today, highlighting the relative importance of present levels.  Gold continues to exhibit a positive correlation with U.S. equities.  The recovery in global equity markets is sending oil sky high while the Dollar depreciates across the board, sparking fear of inflation.  Gold has served as a reliable hedge against inflation in the past.  As a result, investors are fleeing to the precious metal.  Additionally, we wouldn’t be surprised if China is aggressively purchasing the precious metal to diversify its reserves.

While momentum is in favor of the uptrend, the downtrend still has several upcoming barriers preventing gold from a large breakout to the upside.  To give you a better idea of the limitations to the upside trend-wise, create layers of downtrends beginning from March 2008 highs and connecting through February 2009 highs.  If the precious metal can manage to rally above these potential downtrend lines, then we may witness an all-out bull trend.  The fact that gold is stabilizing around $950/oz is a positive sign indicating bulls could be preparing to take the next step to the upside.

Fundamentally we maintain our resistances of $950.87/oz, $953.40/oz, and $955.66/oz with fresh top-ends resting at $959.24/oz and $961.45/oz.  To the downside, we see supports of $948.96/oz, $946.33/oz, $944.48/oz, $942.45/oz, and $940.45/oz. Gold is currently trading at $950.50/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.

Source: ForexYard

The U.S. Dollar and Crude Oil experienced much bullishness in yesterday’s trading. The Dollar reacted positively to decent existing Home Sales data and Timothy Geithner’s optimistic speech regarding the U.S. economy. This helped the Dollar record a correction against most of its major currency pairs. Crude Oil also reacted positively to the news, helping the “black gold” extend its bullish run.

Economic News

USD – Dollar Rises on Positive Economic Data

The Dollar rallied yesterday against most of its major counterparts after data suggesting the slowdown in the U.S. housing market has bottomed out gave support to the U.S. currency as a safe-haven. The Dollar has been sold off recently partially due to growing optimism about the outlook for the U.S. economy. The USD finished yesterday’s trading session 150 pips higher against the EUR at the 1.3819 level.

The major economic event that came out of the U.S yesterday was the Existing Home Sales data release. Home resales in the U.S. probably rose in April as foreclosure auctions and improved affordability spurred bargain hunters. Moreover, record-low mortgage rates, tax credits and falling prices may keep boost demand of unsold homes. In turn, a pickup in sales may help stem the slump in property values, which is key to shoring up household finances and construction as the economy begins to emerge from the recession.

The Dollar also extended its gains against the EUR yesterday after an auction of fresh five-year Treasury debt attracted solid demand, easing fears that U.S. deficits have soured foreigner’s appetite for U.S. assets.

USD trading will be interesting today as important economic data is expected to be released. From 12:30 GMT a series of economic indicators will be released, starting with Core Durable Goods figures, Unemployment Claims and the New Home Sales. Surprisingly, almost all of these releases are expected to be higher than their previous figures, meaning the USD could continue to show further bullishness today. Traders should stay close to the market today, as there is a strong chance to capitalize on the fluctuations which will likely follow these releases.

EUR – The EUR Loses Momentum

The EUR lost momentum during yesterday’s trading session, correcting the sharp gains against the Dollar and JPY seen last week. This was following comments by a European Central Bank policymaker suggesting further Interest Rate cuts could not be ruled out, and profit-taking after a rally last week hurt the European currency. By yesterday’s close, the 16 nation currency fell sharply against the USD, pushing the oft-traded currency pair to 1.3819. The EUR experienced similar behavior against the JPY and closed at 1.3300.

However, the Pound Sterling was the biggest mover amongst the majors, propelled higher by receding pessimism about the UK economy and financial sector. This was boosted by a general move into riskier assets as equity markets rose after a pick-up in U.S. consumer confidence. The Pound outperformed the EUR, hitting $1.60 for the first time in almost seven months as investors continued to pare back the large bets against the currency built up after the collapse of Lehman Brothers last year.

Looking ahead to today, the most important economic indicator scheduled to be released from the Euro-Zone is the German Unemployment Change at 8:00 GMT. Analysts are forecasting this figure to slightly increase from its previous reading. Traders will be paying close attention to today’s announcement as a stronger than expected result may boost the EUR in the short-term. Traders are also advised to follow the CBI Realized Sales figures coming out of Britain at 10:00 GMT, and the Unemployment Claims figures coming out of the U.S. at 12:30 GMT as these results may set the EUR’s main currency crosses going into next week.

JPY – Yen Experiences Mixed Results against the Majors

The Yen completed yesterday’s trading session with mixed results versus its major currency pairs as investors chose the Dollar over the Yen for a safe-haven trade. The JPY fell against the USD and closed around 95.25. However, the Japanese Yen rose almost 40 pips versus the EUR, closing at 133.00.

The major economic event that came out of Japan yesterday was the Retail Sales figures. Retail Sales fell for an eighth month in April as worsening job prospects and declining wages deterred shoppers. The deep recession is spreading to households, whose outlays account for more than half of the economy. Japan will struggle to return to a sustainable growth path as long as companies from Toyota Company keep cutting jobs to minimize losses.

Crude Oil – Crude Oil Approaches the $63 Price Level

Crude Oil prices experienced another day of appreciation as the oft-traded commodity nearly hit $63 during yesterday’s trading session. This has been compounded by a weaker Dollar in recent weeks, causing investors to flee to commodities such as Crude Oil. Furthermore, if the U.S. continues to publish more positive economic news, and if the American government continues to be aggressive in tackling the current financial crisis, then Crude prices may hit $75 by the 4th quarter of 2009.

Expectations that consumers may once again want more Oil when the recession bottoms out have also fueled the rally, with traders watching the stock market for economic telltales. There is a reasonable possibility that Oil prices will continue to be bullish going into next week, providing that the economic situation of the leading economies continues to rapidly improve.

Technical News

EUR/USD

The pair has experienced high volatility in the past day. The 1-day oscillator fails to show a clear direction for the pair. However, the 1 hour and 1 day chart’s RSI signals that the pair is set for some bullish momentum today. Going long with tight stops could turn out to be a good strategy today.

GBP/USD

The 4-hour and 1 day chart’s Slow Stochastic indicates that the pair is set for bearish behavior today. However, the 1-hour, 4-hour and 1 day chart’s RSI backs bullish momentum for the near future. Waiting until the signals are clearer may be a wise choice until entering this pair.

USD/JPY

The pair has experienced much bullish behavior in the past week. The 4-hour and daily chart’s Slow Stochastic indicates that a bearish cross is imminent. However, the 1 day chart’s RSI shows that there is still much bullish momentum for the upcoming day. Going long with tight stops may be the correct pick for today.

USD/CHF

In the past several weeks the pair seems to have been oversold. Therefore, the pair’s behavior in the past few days points to a bullish correction. The 1-hour and 1 day chart’s Slow Stochastic points to a continuation of a short-medium term bullish correction. It may be a wise choice to enter a popular trend as the pair could surpass the 1.1000 mark in the foreseeable future.

The Wild Card – Crude Oil

Crude Oil is currently undergoing a bullish correction as it approaches $65 a barrel. The pair is approaching the upper boarder of the chart’s 1 day Bollinger Bands. The bullish trend is likely to continue as the commodity approaches the 70 line on the 1 day chart’s RSI. Entering this popular trend now seems to be a good option today for forex traders.

Forex Market Analysis provided by Forex Yard.

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