U.S. Dollar Trading (USD) the recent dollar strength reversed overnight with the Euro and AUD finding support and the moves in the US long term interest rates settling down. Since last Friday’s nonfarm payrolls bond traders have been pricing in the increase of the US interest rates at a faster pace. Weekly jobless claims continued to be strong at 351k and the Philly Fed increased to 12.5. Looking ahead, March Consumer Sentiment forecast at 76 vs. 75.3 previously. February CPI is forecast at 0.4% vs. 0.2%.

The Euro (EUR) after surviving the 1.3000 test during the Asian session the single currency reversed and we saw a rally higher into Europe back above 1.3100 in a positive day for range traders. The next resistance is close at 1.3125 and if broken then would confirm the downside pressure is over for now. The SNB held and failed to inspire more EUR/CHF buying which eased back under 1.2100. The Sterling (GBP) kicked above 1.5700 shrugging of the negative outlook to its rating from Fitch. The EUR/GBP is holding above 0.8300 comfortably and the market seems content to trade the range for now 0.8300-0.8400. Looking ahead, January Trade Balance previously at 9.7bn

The Japanese Yen (JPY) the USD/JPY moved above Y84 in Asia but failed to hold in Europe as the USD strength retreated across most pairs. The recent run up has been quite steady and there has not been a substantial pullback in an almost 8 yen rally from Y76 2 months ago. Australian Dollar (AUD) the AUD/USD has been under pressure all week until the buyers finally sparked a short squeeze overnight and we saw a move back above 1.0500. The AUD/JPY is testing Y88 and a break here might drag the major higher as well as we have seen this effect in the past. Y90 is the bull’s next target and will spark talk in the market of the return of the carry trade.

Oil & Gold (XAU) Gold moved higher with the rest of the market and we saw $1665 tested in the US session after $1635 supported earlier in the day. OIL/USD Broke lower on rumors the US and UK were looking to release strategic reserves of oil to lower the price.

Pairs to watch

USD/JPY A pullback just better opportunity to buy?

AUD/USD to hold above 1.0500 as stocks rally?

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.2839

1.2974

1.3075

1.3259

1.3291

USD/JPY

81.97

82.87

83.55

84.26

85.00

GBP/USD

1.5525

1.5611

1.5705

1.5798

1.5880

AUD/USD

1.0359

1.0401

1.0525

1.0577

1.0661

XAU/USD

1625.00

1642

1660

1685

1726

OIL/USD

103.00

105.00

105.40

106.00

107.00