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November 2014 Archives

November 3, 2014

Yen Plummets as BOJ Increases Monetary Stimulus

Monday, November 3, 2014

The surprising announcement of additional monetary stimulus measures by the Bank of Japan on Friday not only sent the value of the Yen plummeting, but also sparked a huge rally in the Japanese equity markets. December Nikkei 225 index futures soared by nearly 8% to highs not seen since 2007, as traders believe that a weaker Yen will help corporate profits - especially for the nation's exporters. In addition, the Government Pension Investment Fund announced that it increased its holdings of both Japanese and other foreign stocks in order to boost investment returns, which resulted in higher equity markets across the globe on Friday.

Fundamentals

Currency traders had a "scary" Halloween as the Bank of Japan (BOJ) surprised analysts by announcing an increase in monetary stimulus. The result was a 3% plunge in the value of the Japanese Yen vs. the U.S. Dollar (USD/JPY), which within the scheme of currency fluctuations is a huge one-day price move. The BOJ announced it would expand the monetary base by 80 trillion Yen per year and would purchase both Japanese exchange traded funds (ETF's) and real estate investment trusts (REIT's). The BOJ's goal in adding the additional monetary stimulus is to help the nation's exporters, who will benefit from a cheaper Yen, as well as to attempt to stimulate inflationary pressures, as the targeted rate of 2% has yet to be reached. The reaction of the market to the BOJ stimulus may have been exaggerated due to catching traders off-guard, as few market participants were expecting any action from the BOJ. So while the BOJ is in an accommodative mode, the Federal Reserve may become a bit more hawkish in reining-in the accommodative monetary policies in place since 2008. This trend could spur further weakness in the value of the Yen vs. the USD, especially once the Fed finally raises the Fund Funds Rate.

Technical Notes

Looking at the weekly continuation chart for Japanese Yen futures, we notice prices falling to multi-year lows as key support at 0.9000 failed to hold. While it appears that the market has become oversold, especially with the 14-week RSI moving below 30. There appears to be little in the way of chart support until the 0.8550 price level, with major support not found until the 0.8150 price level. Taking a long-term look at the market shows that the recent price decline has not yet even reached the 50% Fibonacci retracement level if we start at the major lows made back in 1976! While support is seen at 0.8550, the next resistance level is found just above the 38.2% Fibonacci retracement level near 0.9510.

Mike Zarembski, Senior Commodity Analyst

November 5, 2014

Traders show no love for the Loonie

Wednesday, November 5, 2014

The Canadian economy received some good news on Tuesday as the country's merchandise trade balance moved to a surplus in September. Canada's trade balance was reported at a positive C$710 million vs. a revised C$463 million deficit in August. The nation's exports rose by 1.1%, with auto sales to the U.S. accounting for a large part of the gains. Imports fell by 1.5% as energy products demand fell.

Fundamentals

The Canadian Dollar, known as the "Loonie" among professional FX traders, has been mired in a 3-year long bear market with its value vs. the U.S. Dollar (USD) falling to levels not seen since 2009. The Canadian economy has seen slower growth than its neighbor to the south, as lower commodity prices and rising consumer debt levels have impacted the country's economic strength. Bank of Canada (BOC) Governor Stephen Poloz appears to have no immediate plans to raise interest rates from its record low of 1%, which is allowing the "Loonie" to continue to weaken vs. the USD. A weaker Canadian Dollar will help the country's exporters and continue to improve the balance of trade with the U.S. With continued slack seen in the Canadian economy, the BOC may continue with accommodative monetary policies potentially well after the Federal Reserve has started to raise U.S. short-term interest rates, which would add fuel to the bear market trend for the Canadian Dollar.

Technical Notes

Looking at the weekly continuation chart for the Canadian Dollar, we notice the market well embedded in a downward trend with prices currently well below both the 20 and 200-week moving averages. The 14-week RSI is approaching oversold levels with a current reading of 32.78. There appears little in chart support until just above the 0.8500 price level with resistance found just above 0.9000.

Mike Zarembski, Senior Commodity Analyst

November 6, 2014

Gold ETF Holdings Keep Shrinking

Thursday, November 6, 2014

Gold futures suffered heavy losses over the past 3 trading sessions since the FOMC terminated its asset purchase program. The end of quantitative easing surprised no one, yet the actual end date did set an extremely negative tone to trading. In yet another example of Fed doublespeak, the FOMC policy statement assured the public that rates will remain low for the foreseeable future and also dropped hints that the bank is pleased with the direction of the economy. The latter part certainly suggests that, at the very least, the Fed does not intend to add additional liquidity.

Fundamentals

Fundamentally, the big story for Gold is ETF holdings, or lack thereof. SPDR Gold Trust holdings shrank to their lowest levels in over 6 years, which is a sign that retail investors are seeing less economic risk going forward. Tomorrow's non-farm payroll report is expected to show the US economy adding 235,000 jobs last month. The unemployment rate is expected to remain at a 6-year low of 5.9%. As long as the US economy can continue to add jobs at this pace, traders can have a reasonable expectation that the Fed, at the very least, will stand pat in its policy. Taking into consideration that the ECB is expected to remain unchanged in its interest rate policy today, this may bode well for the US Dollar.

Technical Notes

Turning to the chart, we see the December Gold contract dropping sharply after failing to maintain gains above the 1240.50 resistance level. Price also failed to hold the 1192.90 relative low from October. Yesterday's close below support at 1150 suggests prices may test the 1100 level in the near-term. The 14-day RSI indicator remains extremely overbought at 13, which could be supportive in the near-term.

Rob Kurzatkowski, Senior Commodity Analyst

November 7, 2014

Not so "Precious" Anymore?

Friday, November 7, 2014

Large speculators continue to shed their net-long positions in Gold futures, and are now net-short in Silver. The most recent Commitment of Traders report shows non-commercial traders, mainly large speculators and funds, still net-long 104,521 contracts for the reporting period ending October 28. In Silver, however, the non-commercial position is a net-short 98 contracts. With both markets appearing to be oversold, any corrective price "bounce" may favor Silver, as those traders still long in Gold may use any rally attempt to offset positions.

Fundamentals

The precious metals markets continue on the defensive, with both Gold and Silver prices trading at levels not seen in 4 years following U.S. elections on Tuesday. The Republican Party took back control of the U.S. Senate, which lifted U.S. equity prices and sent the U.S. Dollar (USD) sharply higher vs. its major competitors. A strong USD is seen by traders as a negative for commodity prices, and in particular precious metals. Falling commodity prices are removing any near-term potential inflation "fears" from traders' minds, which eliminates one of the noted benefits of holding precious metals as an "inflation hedge". While cash market traders note some "bargain hunting" buying in Gold, especially from Asia, the precious metals ETF's have seen outflows of well over a billion dollars in October, as investors move funds to better performing investments.

Technical Notes

Looking at the weekly continuation chart for Silver futures, we note that the sell-off accelerated to the downside once support and the base of the descending triangle formation failed to hold. Notice that this is the second major descending triangle on the weekly chart, second only to the major formation drawn from the 2011 high. Prices are currently well below both the 20- and 200-week moving averages, but the 14-week RSI has moved to oversold territory, with a current reading of 22.83. It is rare for a long-term chart to remain at well overbought or oversold levels for a prolonged period of time, so we may be getting close to an upside price correction as weak bears begin to book profits. The 2010 low in Silver at 14.65 is seen as the next major chart support level, with resistance found at 17.78.

Mike Zarembski, Senior Commodity Analyst


November 10, 2014

Bulls Crying over Spilled Oil

Monday, November 10, 2014

The influence of the Organization of Petroleum Exporting Countries, better known as OPEC, is starting to see some of its dominance in the Oil market begin to wane, as global production from shale formations increases. In its annual world Oil outlook, OPEC expects its Oil output to decline to 28.2 million barrels per day by 2017, which is 1.8 million barrels per day lower than current production totals. While the cartel's long-range forecast continues to call for higher production through 2040, much of that is dependent on an eventual decline in so called "tight" Oil production such as that found in the shale formation in the U.S., while global demand for Crude resumes its upward trajectory.

Fundamentals

That" bullish bias" that seemed embedded in Oil prices as Crude hovered north of $100 per barrel certainly has vanished, as a global glut of Oil combined with just okay demand has triggered what was unthinkable just a few years ago--a bear market. Here in the U.S., Crude Oil inventories stand at just over 380.2 million barrels as of October 31, which is over 20 million barrels above the 5-year average. Surging U.S. Oil production, which is approaching 9 million barrels per day, is helping to curtail U.S. Oil imports, which fell to 6.675 million barrels per day last week according to the Energy Information Administration (EIA). The growth of U.S. Oil production is not expected to diminish anytime soon, with the EIA estimating U.S. Oil production to average 9.5 million barrels per day in 2015, which would be a 44-year high for U.S. production. With WTI Crude prices now trading below $80 per barrel, there has been some talk that current price levels could force some pain for some marginal U.S. shale Oil producers. However, it would probably take Crude prices averaging closer to $60 per barrel to really start to cause some pain for producers.

Technical Notes

Looking at the weekly continuation chart for Crude Oil, we notice that the uptrend line drawn from the major lows made back in 2009 has failed, which triggered the start of the current bearish trend for prices. Supporting the bearish argument for Oil prices is the recent crossover of the 20-week moving average (MA) below the 200-week moving average, which is generally viewed by technicians as negative for prices. The 14-week RSI has fallen well into oversold territory, with a current reading of 22.79. With major support seen at 75.00, we may see a period of short-covering buying emerge, which should help to shake-out weak bears for the market. However, it would be difficult to become bullish on the Crude market until we see a weekly close back above the 200-day MA, which is currently near the 95.00 price area.

Mike Zarembski, Senior Commodity Analyst


November 12, 2014

Recession Fears Weaken the "Aussie"

Wednesday, November 12, 2014

The Australian economy received a bit of good news on the employment front as the Australian Bureau of Statistics (ABS) reported that 24,100 jobs were created in October, and the unemployment rate remained steady at 6.2%. The improvement is especially impressive as all the gains were seen in full time employment which rose by 33,400. However, traders have become a bit gun-shy regarding the reliability of the employment data of late as the ABS has been forced to issue several revisions to the employment data due to issues involving seasonal adjustments.

Fundamentals

Currency Bears have traveled to the "Land Down-under" as the Australian Dollar (Aussie) had fallen to 4 year lows against its Dollar cousin in the U.S. The Australian economy has faced some headwinds stemming from the end to the so called "commodity boom", caused by the once insatiable appetite for commodities from Asia and especially China. Some analysts expect the Australian economy to grow by less than 2% in 2015, with the majority of economic growth coming from exports. Domestic growth has become anemic as spending by both corporations and individuals have slowed, as fears of a recession have led to increased savings and away from investment spending. These economic growth fears have triggered calls for the Reserve Bank of Australia (RBA) to lower interest rates from its current record low of 2.5% to help stimulate the slowing economy. The potential for lower interest rates in 2015 is helping to keep pressure on the Aussie, especially against the U.S. Dollar where traders believe the Federal Reserve will begin to hike interest rates by mid-year.

Technical Notes

Looking at the weekly continuation chart for Australian Dollar futures, we notice prices trending lower since all-time highs were made back in 2011. Prices are now below both the 20 and 200-week moving averages, and the 14-week RSI has moved into oversold territory with a current reading of 28.67. For those with a long-term prospective, we should note that the market is still in a uptrend from the major lows made back in 2001, and it is conceivable the current 3-year long bear move is nothing more than a "bull flag" in a multi-year bull market cycle for the Aussie. The next major support level is seen near the 2010 lows of 0.8065, with resistance found just above the 0.9450 level.

Mike Zarembski, Senior Commodity Analyst


November 11, 2014

Swimming in Oil

Swimming in Oil

Crude Oil futures continue to fall ahead of inventory data from the API and EIA this afternoon and tomorrow morning, respectively. The supply glut has even overshadowed geopolitical risks to the Oil market. Reports on the escalation in the conflict between Ukraine and Russia suggest there are actual acts of violence and not simply troop movement and political posturing. Traders may want to closely monitor this situation. Libya is also experiencing difficulties. Exports at the Hariga oil port in eastern Libya were halted on Saturday when state security guards began a sit-in protest over unpaid wages. Also, the El Feel oilfield was shut down on Sunday due to a power outage.

Fundamentals

US Crude Oil inventories are forecast to have risen by 1 million barrels last week, as supply continues to outpace demand. Stockpiles are expected to have reached to 381.2 million barrels in the week ended November 7. Traders may want to keep a close eye on the Cushing, OK inventory levels, as they could give traders a bit more insight into the possible short-term direction of the market. If Cushing begins to see substantial builds, this could be a sign that refineries simply do not have enough demand to keep up with supplies. Iraq followed Saudi Arabia's lead and reduced the selling price for US Crude Oil shipments, while raising the cost for Asian and European consumers. Thus far, there has been little interest from OPEC member countries to trim output; suggesting US supplies will remain more than ample.

Technical Notes

Turning to the chart, we see the December Crude Oil contract trading below the $80 level for over a week now. The $75 support level can be viewed as critical support for the Oil market. So far, prices have managed to stay above this potentially pivotal level. The RSI indicator has slowly been moving higher, despite falling prices. This could be interpreted to possibly be a signal that the market could be set to turn around in the near-term.

Rob Kurzatkowski, Senior Commodity Analyst

November 14, 2014

Treasury Bonds: The Bull Market that Will Not End

Friday, November 14, 2014

Here are the highlights from the October payroll reports for the U.S. and Canada

Payrolls Unemployment Rate

U.S. + 214,000 Oct 5.8%

Canada +43,100 Oct 6.5%

Fundamentals

You have to hand it to those traders who have remained bullish on U.S. Treasury Bond futures, as this bull market just refuses to end, despite many pundits' calls that interest rates have bottomed. Just last week, Treasury futures prices rebounded from a short-term correction following the price "spike" back on October 15 which sent prices higher by over 6 full points in just one trading session. The October Non-farm Payrolls report was the latest catalyst to cause grief for Bond bears, as the number of jobs created last month were on the low side of analysts' estimates. While the payroll figures were not horrible, another month of moderate job growth with no signs of wage inflation should allow the Federal Reserve to remain on hold for several more months before finally beginning the process of raising the Fed Funds rate. In fact, Fed Chairwoman Janet Yellen made comments at a conference in Paris last Friday that "supportive policy remains necessary" due to the anemic pace of economic growth. The so-called U6 employment figure, which is a broader measure of U.S. employment, was at 11.5% in October. While the rate fell by 0.3% from September's figure, it is still well above the percentages seen during the last major U.S. recovery period, where the U6 rate was closer to 9%. In addition, another consideration is that interest rates on German and Japanese government bonds, which many investors also consider "safe haven" assets, are well below the rates currently available on U.S. Treasuries. So for non-U.S. investors, U.S. rates look "attractive," which adds additional buying pressure to the U.S. Treasury market.

Technical Notes

Looking at the monthly continuation chart for Treasury Bond futures, we note that prices have been in a minor uptrend since the start of 2014, with the monthly chart eliminating some of the "noise" seen on the daily chart. The big-picture chart clearly favors the bull camp, as the major trend-lines drawn from both the 1981 and 1984 major lows have not yet been tested. The 14-month RSI is currently neutral to slightly positive, with a current reading of 55.49. Support is found at the minor uptrend line drawn from the December 2013 low near the 137-00 price level. Upside resistance is seen at the October 2014 "spike" high at 148-00.

Mike Zarembski, Senior Commodity Analyst


November 17, 2014

Not So Sweet After All?

Monday, November 17, 2014

The direction for Sugar prices may take a cue from the energy markets, as the recent sell-off in gasoline prices may cause ethanol usage to decline, especially in Brazil, which is the largest producer of ethanol made from Sugarcane. Sugarcane not used for fuel production may be used for food production instead, which would be a bearish factor for the world raw Sugar futures contract. However the effects of this switch from fuel to food usage would not occur until the 2015-16 production season, with a myriad of still unknown factors potentially influencing where producers ultimately shift their crops for processing.
Fundamentals

The recent price rally in Sugar futures prices off of multi-year lows has encountered some headwinds, as prices failed to hold above major chart resistance levels. It appeared that the sharp price rally last Tuesday may have been a signal that prices may have finally reached a near-term low at 15.42, as the market finally moved above the downtrend line drawn from the 2014 highs made back in June. However, the upward momentum was short-lived, as prices declined by over 2% on Thursday, which may be signaling that the recent rally is nothing more than a "bull trap" in a bear market. It is notable that Sugar market fundamentals are becoming less bearish, as the huge global Sugar surplus seen the past few years is beginning to diminish. In fact, the International Sugar Organization recently lowered their forecast for the global Sugar surplus to a mere 473,000 tons for the 2014-15 marketing year and expects the 2015-16 season to be in deficit. As we move into 2015, traders and analysts will continue to keep an eye on the value of the Brazilian Real, as any further weakness in the currency may encourage producers to attempt to increase exports as a way to obtain more reals when converting foreign currency obtained from sales outside of Brazil.

Technical Notes

Looking at the daily chart for March Sugar, we notice prices have turned choppy since the major downtrend that started in late June finally found some buying support near the 15.50 price level in September. Since that time, prices have staged a series of short-term rallies followed by price declines, with a new low being made back earlier this month. An attempt to move prices above the major downtrend line drawn from the June highs lasted only 1 trading session, as fresh selling emerged which suppressed any additional upward momentum as prices moved once again back below the 20-day moving average. The 14-day RSI continues to hold near neutral levels, with a current reading of 45.01. The potential double-bottom formation on the daily chart should be noted, but a weekly close above the late June downtrend line would need to occur to add credence to this bullish chart formation. Support is seen at the recent low of 15.42, with resistance found at the November 12 high of 16.44.

Mike Zarembski, Senior Commodity Analyst


November 18, 2014

Can the ECB Help Gold Avoid a Total Meltdown?

Tuesday, November 18, 2014

Gold futures received a boost from the European Central Bank when bank President Mario Draghi stated that unconventional measures may be taken to spur growth. These measures could include asset purchases, including physical bullion and ETFs. Inflation in the Eurozone is lower than ECB leadership would like to see, reinforcing Mr. Draghi's statement. Even if the ECB chooses to stay away from bullion purchases, aggressive monetary policy could be beneficial to Gold prices.

Fundamentals

Physical demand for Gold, outside of exchange traded products, has remained relatively healthy. This may suggest that prices could find a basement level sooner rather than later. According to Governor Elivra Nabiullina of the Central Bank of Russia, the bank has purchased 150 metric tons of Gold bullion this year. Since the end of September, when the bank last reported reserve data, the CBR has added 35 metric tons. The SPDR Gold Shares Trust ETF has added 2.39 tonnes on Monday, which was the first increase in around two weeks and the largest increase in a month and a half. The Indian government is expected to restrict Gold imports in reaction to a spike in recent imports of the metal. It will be interesting to see how the US Dollar Index moves going forward. Right now, it looks as though the index is consolidating in a flag-like formation. Failure to break out to the upside could be seen as negative for the greenback.

Technical Notes

Turning to the chart, we see the December Gold contract bouncing after testing the 1150 level on the downside. Had prices broken through the level with any vigor, a test of the 1100 mark was all but imminent. If prices are able to manage several solid closes above the 1200 level, Gold may gain some upward traction. The RSI indicator has recovered from oversold levels as the result of recent activity. It is of interest to note that the momentum indicator has remained relatively flat, compared to prices and the RSI, suggesting this could be a dead cat bounce in Gold prices.

Rob Kurzatkowski, Senior Commodity Analyst


November 19, 2014

Corn Prices Weak as Harvest Nearly Complete

Wednesday, November 19, 2014

While strong exports for Soybeans vs. Corn has supported this seasons Soybeans futures prices, the picture for the "new" crop that will be harvested in the fall of 2015, may start to tell a different story. Analysts' are forecasting the potential for a record Soybean harvest in South America in 2015 as continued strong demand for Soybeans and relatively high prices favors additional acres for Soybean plantings vs. Corn. Even if Soybean exports increase next year, record production could cause global Soybean ending stocks to surge to record levels next season, while global Corn inventories have the potential to fall sharply as planted acreage shifts from Corn to Soybeans.

Fundamentals

Record U.S. Corn production has not slowed U.S. producers who have nearly finished harvesting this season's crop. The USDA reported that 89% of the U.S. Corn crop is now in the bins vs. the 10-yr average of 85%. The two largest Corn producing states, Iowa and Illinois, are even further ahead of schedule at 92% and 94% respectively. All this harvested Corn needs to go somewhere with many producers opting to store the grain on the farm in the hope of selling at a later date when prices are more attractive. Analysts report some tightening of the basis in parts of the Corn Belt, where Ethanol plants have been paying a premium to obtain needed supplies. However, Corn exports have been a bit disappointing; with exports for the 2014-15 season running at just over 17% of the USDA estimate vs. closer to 20% during the past 5 years for this time of year. Soybeans exports on the other hand are running at a record pace which helps to explain how a record crop in Corn is keeping prices below $4, while a record soybean harvest has not kept prices below $10 per bushel for any meaningful amount of time.

Technical Notes

Looking at the daily chart for March Corn, we notice prices rebounding off of the major low near 330.00 made back in early October. While it appears that a classic "V" bottom is forming on the daily chart, the recent test of resistance at 400.00 was met with some significant selling pressure which could stall the recent price recovery. A close below the 20-day moving average could see prices attempt a test of near-term support at 371.50. A close above the July 17 high of 407.00 could signal a potential test of the 200-day moving average, which is currently near the 431.50 price level.

Mike Zarembski, Senior Commodity Analyst

November 28, 2014

Cattle Prices Test Support, but is "Bull" Market in Jeopardy?

Friday, November 28, 2014

While both pork and beef prices are at near record price levels, even poultry prices are starting to fly higher. For most of 2014, the price of whole chickens has soared with record prices seen due to surging demand, as consumers turned to poultry in the face of record high beef prices. However, record prices for chicken has producers ramping up production as high profit margins and lower feed costs should allow for chicken production to rise to record levels in 2015, which should allow for a moderate reduction in retail prices in 2015.

Fundamentals

Your steaks and hamburgers may become even more expensive next year as the USDA expects beef production to decline in 2015. In its World Agricultural Supply and Demand Estimates report released on November 10th, the USDA forecasted beef production to decline by 3.2% in 2015 which follows a 4.9% drop this year. Record beef prices and lower feed costs should see fed Cattle weights increase next year, but heavier market ready cattle may not be enough to offset what is expected to be lower Cattle marketings in the second half of next year. Cattle slaughter rates continue to fall below year-ago levels, as packer margins continue in be in the red. Analysts expect a sharp decline in beef production in the 1st quarter of 2015, with some even expecting a record drop from the 4th quarter of this year. With cash Cattle trading as high as $174 per hundredweight, last week, we still see December and February futures trading at little no to premiums to the cash market, as it appears that traders are becoming reluctant to aggressively bid for futures with price levels currently just below all-time record highs.

Technical Notes

Looking at the daily chart for February Live Cattle, we notice prices beginning to run into some resistance at the 172.750 level. This may have been the result of some profit-taking selling prior to last week's Cattle of Feed report. The 14-day RSI has started to trend lower after resisting a move above 70, which is considered the starting point of an overbought market condition by many technical analysts. Traders may want to keep an eye on the uptrend line drawn from the August 21 low, which was a key support point for the latest up move. A weekly close below this trendline could signal a test of support near the 165.000 price level.

Mike Zarembski, Senior Commodity Analyst

November 24, 2014

Euro Plummets as Draghi Hints at Additional Stimulus Measures

Monday, November 24, 2014

The value of the Euro fell even more sharply against the so called "commodity currencies" such as the Australian and Canadian Dollars following an announcement by the People's Bank of China (PBOC) that it lowered the benchmark interest rate by 0.25% to 2.75%, as well as the one-year lending rate by 0.4% to 5.6% in attempt to shore up lenders as the number of bad loans soared by 10% in the 3rd quarter.

Fundamentals

Euro bears celebrated in the wee hours of the morning on Friday as European Central Bank (ECB) President Mario Draghi announced that the Bank was prepared to expand monetary stimulus in an attempt to stimulate the European economy as inflationary pressures slowed. In a speech to the European Banking Congress, ECB President Draghi make it clear that bank officials will take steps necessary to spark inflation, including expanding assets being purchased by the ECB to include sovereign government debt. The timing of the announcement could not be better as the Euro had been in a minor uptrend vs. the U.S. Dollar as word of an expansion of stimulus measures by the ECB send the Euro down over 1.3% vs. the greenback as short-term bullish traders rushed to the exits. The trend for the Euro now seems to mirror that of the Japanese Yen, where the nation's Prime Minister Shinzo Abe is attempting to break the back of deflation that has plagued the Japanese economy for over two decades.

Technical Notes

Looking at the daily continuation chart for the Euro futures, Friday's plunge confirmed the formation of the most recent "bear flag" technical formation. Despite the large percentage move, the market failed to test the yearly low of 1.2361 although this support level may be difficult to defend as momentum has once again turned in favor of bearish traders. There appears to be little in the way of major support for the Euro until the July 2012 lows near the 1.2050 price level. Momentum as measured by the 14-day RSI has weakened, but remains above oversold levels with a current reading of 37.90. Near-term resistance is seen at 1.2605, with major resistance found at 1.3005.

Mike Zarembski, Senior Commodity Analyst