Weak US Close Puts Bears Back in Control

U.S. Dollar Trading (USD) saw solid strength on the back of renewed Eurozone concerns and a very weak close in US stocks sparking safe haven demand. April Existing Home Sales jumped 7.6% to 5.77m vs. 5.62mln forecast. In US stocks, DJIA +125 points closing at 10193, S&P +16 points closing at 1087 and NASDAQ +25 points closing at 2229. Looking ahead, March Case Shiller HPI is forecast at -0.3% vs. -0.1% and CB Consumer for May forecast at 59 vs. 57.9 previously.

The Euro (EUR) was under pressure for most of the day as weekend press focused on the Bank of Spain take over of a regional bank and Banking stocks in the US were hammered on heightened credit risk flowing throughout the markets. EUR/USD traded with a low of 1.2331 and a high of 1.2540 before closing at 1.2350. Looking ahead, March Industrial Orders forecast at 2% vs. 1.5% previously.

The Japanese Yen (JPY) the USD/JPY performed well grinding higher above Y90 and helping crosses rally until the last hours of US trade in which US stocks fell heavily and the Yen found safe haven demand. Fear of BOJ price checking below Y90 is keeping the losses limited for the moment. Another big level in the market is EUR/JPY at 110 Overall the USDJPY traded with a low of 89.73 and a high of 90.65 before closing the day around 90.10 in the New York session.

The Sterling (GBP) was well supported on dips from GBP/JPY buying and EUR/GBP selling to push GBP/USD up above 1.4500 briefly in Europe before falling on the slide in the Euro. Concerns about UK Debt are still in focus. Overall the GBP/USD traded with a low of 1.4350 and a high of 1.4531 before closing the day at 1.4410 in the New York session. Looking ahead, Revised GDP Q1 forecast at 0.3% vs. 0.2% previously.

The Australian Dollar (AUD) was able to rally to resistance at 0.8350 before sliding at the end of the US session as risk aversion spiked higher. AUD/JPY is once again providing most of the momentum as bargain hunters buy at the bottom and sellers track the stock market lower. Overall the AUD/USD traded with a low of 0.8183 and a high of 0.8361 before closing the US session at 0.8240.

Oil & Gold (XAU) rallied as Euro concerns resurfaced and push the alternative currency higher. Overall trading with a low of USD$1181 and high of USD$1197 before ending the New York session at USD$1192 an ounce. Was stable edging back above $70 for most of the day. WTI Oil Closed +$0.10 at $70.20 a barrel.

TECHNICAL COMMENTARY

       

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.2135

1.2145

1.2345

1.2731

1.2747

USD/JPY

87.95

88.97

90.15

91.88

92.97

GBP/USD

1.4111

1.4231

1.4410

1.4517

1.4918

AUD/USD

0.7828

0.8000

0.8235

0.8499

0.8725

XAU/USD

1146.00

1166

1191.00

1229

1250.00

OIL/USD

68.00

69.50

69.80

70.00

72.50

Euro - 1.2345

Initial support at 1.2144 (May 19 low) followed by 1.2135 (0.50 of 0.8232-1.6039). Initial resistance is now located at 1.2731 (0.618 of 1.3094-1.2144) followed by 1.2747 (May 12 high)

Yen - 90.15

Initial support is located at 88.97 (May 20 low) followed by 87.95 (May 6 low). Initial resistance is now at 91.88 (May 20 low) followed by 92.97 (May 18 high).

Pound - 1.4410

Initial support at 1.4231 (Mary 20 low) followed by 1.38 (March 18 2009 low). Initial resistance is now at 1.4517 (May 18 High) followed by 1.4918 (May 13 low).

Australian Dollar - 0.8235

Initial support at 0.8000 (Big Figure) followed by the 0.7828 ( 2009 low). Initial resistance is now at 0. 8499 (May 18 low) followed by 0.8725 (May 19 high).

Gold - 1191

Initial support at 1166 (May 21 low) followed by 1146 (April 27 low). Initial resistance is now at 1229 (Key level) followed by 1250 (1123.90 plus 1.618 of 1085.3-1170.1).

Oil - 69.80

Initial support at 69.50 (Intraday Support) followed by 68.00 (Intraday Support). Initial resistance is now at 71.00 (March high) followed by 72.50 (Intraday Resistance).