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Good day.

It is Tuesday and how are we doing?

I spoke about the dangers of an unexpected poor German ZEW Economic Sentiment and the release was indeed so. As expected, it did have an effect on the currency pair. The EUR/USD currently remains sideways, testing and bouncing off 1.5000.

The S&P 500 fell shy of 1100 and bounced back to the lower 1090s.

The march of Gold has paused for now and it is currently around $1103. Looking almost like a perfect doji to me now.

Oil slowly creeps up and is now at $77. Overall, it may be still ranging.

***

Besides the poor German ZEW report, a few other reports did not clock in well as well.For example, both French and Italian Industrial Production clocked in negative.

Stay alert as a series of poor news may harm positive sentiments.

Furthermore, we are at strong technical lines for EUR/USD, S&P 500, Gold and Oil and these may add more reason for a bounce off resistance.

Tomorrow will be a US and French bank holiday and the low volume may open up windows for unexpected movement.

There will be an auction in US Dollar Treasuries and observing the take up rate may shed some light on the demand for US Dollar.

Folks, I once again repeat this. NO ONE CAN PREDICT 100% HOW THE MARKET WILL MOVE. IF ANYONE SAYS AND PROVES HE CAN, BRING HIM TO ME AT ONCE! I WILL ASK HIM THE NEXT MOVE AND GAMBLE 100 STANDARD LOTS ON IT.

Ok breathe in breathe out. Pardon me. I hate it when folks see forex as an easy no risk you tell me and i trade and i win activity.

We may see some demand for US Dollar as the menu of poor data today may have spooked a trader or two.

Bullish warriors may need to hold the fort at 1.5000 before approaching 1.5063+.

Bearish attacks may need to overcome the strong region of 1.4950+ before embarking on a conquest of 1.4910+.

Once again because i care and i want to remind you ( perfect excuse for being a nag ), we may see low volume madness tomorrow and hence employ proper money management.

***

I felt like a fool today. Tried to make conversation with someone and was taken like a joke.

Why do some people exist just to make people miserable?

This is like stop hunting to me! You know, stop hunting simply triggers your stop, taking you out of your trade and heads back in your direction, mocking and laughing at your misery.

Arrgghh. I feel so stupid to be nice. I feel like going into BattleForge to vent my anger but with my PVP skills, i will become another joke. Forget it. I think i will go read some forex articles. At least they don’t mock at me for reading them.

… Duh

Trade safe.

Read more Forex Articles and Views by The Koala at www.thegeekknows.com

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The USD/JPY is consolidating around its highly psychological 90 level as we witness a broad-based preference for the Dollar.  However, focus could shift to the Yen soon since Japan will release Core Machinery Orders late Tuesday night EST along with a wave of Chinese econ data.

Therefore, volatility could pick up in the next 24-48 hours, especially if the Asian data points outperform expectations.  While analysts are expected continual growth in Japan’s CMO data, China’s numbers could have a larger impact considering it is Japan’s largest trading partner.  Further strength in China’s economy implies greater demand for Japanese goods, thereby strengthening the Yen.  On the other hand, weak Chinese econ data could rattle markets and send the USD/JPY back above 90.

Technically speaking, the psychological 90 area is proving to be a tough psychological area once again.  The USD/JPY continues to gravitate towards 90 despite recent hints of a topside breakout.

The currency pair is currently trading back below 90, yet is holding above our 1^st and 2^nd tier uptrend lines.  Hence, there are a few more technical cushions separating the USD/JPY from a retest of October lows.  As for the topside, the USD/JPY faces multiple downtrend lines along with 11/6 and 11/4 highs.

Present Price: 89.85
Resistances: 89.92, 90.06, 90.19, 90.31, 90.43, 90.58, 90.72
Supports:   89.71, 89.61, 89.43, 89.26, 89.15, 88.99, 88.83
Psychological: 90, November and October Lows

Gold has retraced to $1100/oz following yesterday’s break above as investors snap up the Dollar in reaction to overbought conditions and disappointing econ data points from both Britain and the EU.  Meanwhile, the S&P futures are staring at their own psychological 1100 level along with previous 2009 highs.  Therefore, today’s consolidation appears healthy thus far as investors take a breather in anticipation of tonight’s wave of econ data from China.

China will release Industrial Production, CPI, CPI, and Fixed Asset Investments.  Investors will likely be paying particularly close attention to China’s econ data since the nation’s economy has been an engine in the global recovery.  An outperformance in China’s data could give the risk trades a nice boost, whereas a cool down could result in further Dollar strength.  Therefore, strong econ data out of China could help gold separate itself from $1100/oz despite today’s retracement.  On the other hand, disappointing China data could lead investors to close out some risk trades as well as take profits in gold.

Technically speaking, we’re still unable to place any sort of reliable downtrend line on gold due to a lack of historical perspective.  Therefore, gold’s key barrier to further topside gains appears to rest in the hands of the psychological $1100/oz level.

As for the downside, gold several uptrend lines serving as technical cushions along with 11/06 lows.  Meanwhile, investors should keep an eye on the EUR/USD’s battle with 1.50.  Gold has been strongly correlated with the EUR/USD.  Therefore, any significant breakout in the currency pair could help drive gold higher.

Present Price: $1101.85/oz
Resistances: $1105.32/oz, $1108.20/oz, $1110.59/oz
Supports: $1100.97/oz, $1097.65/oz, $1094.78/oz, $1091.43/oz, $1087.59/oz
Psychological: $1100/oz, $1075/oz.

The Cable has pulled back from yesterday’s highs after Britan’s Trade Balance came in much weaker than expected (-7.2 bill. Vs -6.1 bill forecast).  The Trade Balance number is a bit disappointing since it works against the recovery we’ve witnessed since January lows.  Furthermore, the rising trade deficit is concerning considering the recent improvement in Britain’s manufacturing production data.

Therefore, this implies that the cause for the rising trade deficit may be more of a symptom of rising imports rather than declining exports.  Either way, the combination of disappointing Trade Balance data along with broad-based strength in the Dollar has been enough to knock the Cable back below our 4th tier downtrend line.  On the other hand, the Cable has avoided a retest of 1.65, and the technicals appear to be working in favor of a near-term uptrend.  As a result, investors shouldn’t become too discouraged by today’s pullback.

Meanwhile, the EUR/USD is battling 1.50 while the S&P futures and gold battle their respective 1100 levels.  Furthermore, the USD/JPY continues to hover around its psychological 90 area.  Therefore, consolidation is the risk trade appears to be a sign of healthy hesitation in the wake of large gains and the face of important psychologicals.  Although the news wire should be pretty quiet in the U.S. today, activity in the FX markets could pick-up later when China releases a wave of economic data late Tuesday EST.   China will release Industrial Production, CPI, CPI, and Fixed Asset Investments.

Investors will likely be paying particularly close attention to China’s econ data since the nation’s economy has been an engine in the global recovery.  An outperformance in China’s data could give the risk trades a nice boost, whereas a cool down could result in further Dollar strength.  Britain will also keep its news flowing with the release of CCC data tomorrow morning along with the BoE inflation report.  BoE Governor King will address the general public as well and investors will be looking for hints of the BoE’s present monetary stance.

Technically speaking, the Cable faces topside technicals in the form of our 4th tier downtrend line, 11/09 highs, and the psychological 1.70 level.  As for the downside, the GBP/USD still has several uptrend lines serving as technical cushions along with 11/06 lows and the psychological 1.65 level.

Present Price: 1.6704
Resistances: 1.6714, 1.6730, 1.6761, 1.6797, 1.6812, 1.6838
Supports: 1.6688, 1.6662, 1.6615, 1.6598, 1.6574, 1.6530
Psychological: 1.70, 1.65, August Highs