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U.S. Dollar Trading (USD) stocks markets fell in response to weaker than expected January US retail sales at 0.3% vs. 0.6% forecast. The Dollar has been rallying now for 3 days and could extend gains if key levels on the USD/JPY and the EUR/USD are broken in unison to create a fresh trend. In US stocks, DJIA -41 points closing at 12226, S&P -4 points closing at 1328 and NASDAQ -12 points closing at 2805. Looking ahead, FOMC minutes for January meeting released. Also today, Weekly Oil Inventories forecast at 1.8mn vs. 1.9mn previously.

The Euro (EUR) GDP missed expectations and hurt sentiment in Europe with Q4 GDP at 0.3% vs. 0.4% forecast although the February German ZEW survey did improve to 85.2 vs. 82.8 previously. Support was found under 1.3500 however and the pair finished just above. Overall the EUR/USD traded with a low of 1.3459 and a high of 1.3552 before closing the day around 1.3490 in the New York session.

The Japanese Yen (JPY) grinded higher on general USD strength but solid resistance was found near Y83.9. Crosses were mixed with AUD/JPY lower on US stocks but GBP/JPY did well on inflations concerns. The BOJ held at 0.1% as widely expected. Overall the USD/JPY traded with a low of 83.18 and a high of 83.94 before closing the day around 83.80 in the New York session.

The Sterling (GBP) was well supported on a hawkish inflation letter sent from the Bank of England Governor to UK government after the January Inflation reading came in at 4% vs. the 2% mandate target rate. Chances that the BOE would have to raise rates to fight inflation are increasing which each passing month of persistently high readings. Overall the GBP/USD traded with a low of 1.6005 and a high of 1.6174 before closing the day at 1.6130 in the New York session. Looking ahead, December Unemployment Rate forecast at 7.9% and January Claimant Count at -3k vs. -4.1k previously.

The Australian Dollar (AUD) was sold hard back through 1.0000 on risk aversion and weak commodities. A softer than forecast Chinese CPI reading provided support in Asia but was interpreted as signs of economic weakness by European and US traders. Overall the AUD/USD traded with a low of 0.9942 and a high of 1.0060 before closing the day at 0.9960 in the New York session.

Oil & Gold (XAU) Broke higher on inflation hedging speculation with gold seen as an alternative investment that holds value. Overall trading with a low of USD$1360 and high of USD $1377 before ending the New York session at USD$1371 an ounce. Oil fell back under $85 on demand concerns. WTI Oil Closed -$0.49 at $84.32 a barrel.

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.3364

1.3396

1.3490

1.3621

1.3736

USD/JPY

82.71

83.08

83.75

83.91

84.21

GBP/USD

1.5964

1.5982

1.6140

1.6186

1.6279

AUD/USD

0.9897

0.9955

0.9975

1.0137

1.0152

XAU/USD

1343.00

1348

1371

1379

1393

OIL/USD

82.50

84.00

84.50

86.50

88.00

Euro – 1.3490

Initial support at 1.3396 (Jan 20 low) followed by 1.3364 (50% retrace of 1.2867-1.3862). Initial resistance is now located at 1.3621 (Feb 11 high) followed by 1.3736 (Feb 10 High)

Yen – 83.75

Initial support is located at 83.08 (23.6% retrace of 81.13-83.68) followed by 82.71 (38.2% retrace of 81.13-83.68). Initial resistance is now at 83.68 (Jan 7 high) followed by 83.91 (Dec 21 high).

Pound – 1.6140

Initial support at 1.5982 (Feb 14 low) followed by 1.5964 (Feb 11 low). Initial resistance is now at 1.6186 (Feb 7 high) followed by 1.6279 (Feb 3 High).

Australian Dollar – 0.9975

Initial support at 0.9955 (61.8% retrace of 0.9804-1.02) followed by the 0.9897 (76.4% retrace of 0.9804-1.02). Initial resistance is now at 1.0137 (Feb 11 high) followed by 1.0152 (Feb 9 high).

Gold – 1371

Initial support at 1348 (Feb 8 low) followed by 1343 (Feb 7 low). Initial resistance is now at 1379 (61.8% retrace of 1424.05-1308.25) followed by 1393 (Jan 13 high).

Oil – 84.50

Initial support at 84.00 (Intraday Support) followed by 82.50 (Intraday Support). Initial resistance is now at 86.50 (Intraday Resistance) followed by 88.00 (Intraday Resistance).

Written by Anthony Darvall