$$US Dollar Chart Setup Warns a Top May Be Taking Shape

13 June 2012 01: 38 GMT THE TAKEAWAY: US Dollar technical positioning warns that a significant medium-term top may be taking shape. S & P 500 positioning still seems to call for weakness.
S & P 500 - Prices put in a Bearish Engulfing candlestick pattern below support-turned-resistance at a falling trend line set from mid-April, hinting a move lower is ahead. Initial support lines up at 1292.90, with a break below that exposing 1265.30. Trend line resistance is now at 1329.10, with a break above that targeting upside barriers at 1357.40 and 1392.10.

Daily Chart - Created Using FXCM Marketscope 2.0
CRUDE OIL - Prices took out support at 83.30 the 14.6% Fibonacci expansion, to challenge the 23.6% barrier at 81.07. A break beneath this boundary targets the 80.00 figure and the 38.2 Fib at 77.33%. The 14.6% expansion has been recast as near-term resistance, with a push back above that targeting the June 7 at the 87.00 high figure.

Daily Chart - Created Using FXCM Marketscope 2.0
GOLD - Prices broke back above the 1600/oz figure to challenge resistance at 1616.23, the intersection of the 61.8% Fibonacci tracing and a falling trend line set from early March. A break above this boundary exposed the 76.4% Fib at 1637.35. The 1600 level has been recast as near-term support, with added reinforcement coming in courtesy of the 50% tracking at 1599.17.

Daily Chart - Created Using FXCM Marketscope 2.0
US DOLLAR - Prices continues to look for direction above support in the 10134-43 area, which now appears like the would-be neckline of a Head and Shoulders top chart training. A break lower confirms the setup and initially opens the door for a challenge of the 38.2% Fibonacci expansion at 10066. The H & S training would imply a measured downside target at 9945. Near-term resistance lines up at 10220, the 61.8% Fib, with a higher targeting the 76.4% boundary at 10316 breach.

Daily Chart - Created Using FXCM Marketscope 2.0

:: S & P; P 500 Accelerates Lower purpose US Dollar Chart Setup Warns of Losses

THE TAKEAWAY: US Dollar technical positioning hints the safe-haven currency may be due for a pullback despite a sharp move lower from the S&P 500.
S&P 500 – Prices are probing through support in the 1288.00-1292.90 areamarked by the October 27 high and the 38.2% Fibonacci expansion to challenge the 50% Fib at 1273.40. A break of the latter boundary exposes the 61.8% expansion at 1258.70. The 1300.00 figure establishes the first layer of major resistance.

Daily Chart - Created Using FXCM Marketscope 2.0
CRUDE OIL – Prices are testing through support at 83.34, the 76.4% Fibonacci retracement, with a break below this boundary exposing 80.16. Highly oversold RSI studies warn that the risk of a corrective rebound may be swelling. Near-term resistance lines up in the 90.14-88.54 area, marked by the early September swing top and the 61.8% Fib.

Daily Chart - Created Using FXCM Marketscope 2.0
GOLD – Prices are testing resistance at a falling trend line set from early March, now at 1630.24. The barrier is reinforced by the 76.4% Fibonacci retracement at 1637.35, with a break higher exposing the May 1 high at 1671.49. Near-term support lines up at 1616.23, the 61.8% Fib, with a break below that opening the door for a test of the 1600/oz figure.

Daily Chart - Created Using FXCM Marketscope 2.0
US DOLLAR – Prices are showing a dramatic Shooting Star candlestick below resistance at 10316, the 76.4%Fibonacci expansion, coupled with negative RSI divergence. The setup hints a pullback may be ahead. Initial support lines up at 10220, the 61.8% level, with a break below that exposing the 10134-43 area.

Daily Chart - Created Using FXCM Marketscope 2.0

£ GBPUSD: Rising Wedge Setup Warns of Reversal

Strategy: Flat
GBPUSD is testing the top of a Rising Wedge chart formation, a barrier reinforced by the 61.8% Fibonacci expansion at 1.6087. The overall setup is broadly indicative of bullish exhaustion ahead of a turn lower but confirmation remains absent and we will remain on the sidelines for now. A break higher exposes the 76.4% Fib at 1.6156. Near-term support lines up at 1.6033, the 50% expansion.

>>> Euro Weakens as ECB Monthly Report Warns of Inflation Risk

12 April 2012 10: 00 GMT THE TAKEAWAY: ECB monthly report sends mixed messages-> Inflation risks seen, central purpose expects inflation to align itself to forecasts-> Euro drops ahead of release purpose stabilizes as markets digest

The moderate economic recovery seen recently is subject to downside risks as inflation threatens to devalue the Euro, the European Central Bank's monthly report for April said today. The statements were in line with ECB chief Draghi's policy speech earlier in the month.

The Euro sank ahead of the ECB's release but stabilized later on as markets digested the mixed messages.

The ECB's Governing Council said it plans to keep interest rates unchanged, and mentioned that it expects price developments to remain stable. The report mentioned a "moderate recovery" seen in the beginning of 2012, but warned that inflationary risks remain a factor in price action. Inflation fears have returned to the fore in Germany as property prices rise and monetary policy remains too loose.

However, the ECB also said it has the tools to combat inflation in the short and long term. The report pointed out that CPI is expected to stay above 2% this year but in the medium-term will slow to the ECB's price stability target.

Forex News - Euro slips as Moody's warns on France

SINGAPORE (Reuters) - The euro and sterling fell on Tuesday after rating agency Moody's warned it may cut its triple-A ratings of France, Britain and Austria while downgrading several euro zone countries, including Italy.
The euro dipped around 40 pips after the Moody's announcement to as low as $1.3145 at one point, and last stood at $1.3162, down 0.2 percent from late U.S. trade on Monday.
The sterling took a hit as Moody's became the first major rating agency to put a negative outlook on Britain's triple-A rating and fell 0.3 percent to $1.5727.
The Moody's decision on euro zone sovereign ratings follows a similar one by Standard & Poor's last month, when France and Austria lost their triple-A status while Italy, Spain, Portugal, Cyprus, Malta, Slovakia and Slovenia were downgraded.
Still, the announcement from Moody's may provide enough impetus for the euro to decline further in the near-term, said a trader for a European bank in Singapore.
"I think the euro will trade lower towards $1.3080," the trader said, adding that there could be a flush out of long euro positions taken recently by short-term speculators.
The single currency rose as high as around $1.3284 on Monday after Greece's parliament approved an austerity bill, bringing the country a step closer to securing a second EU/IMF bailout and soothing investor jitters about the possibility of a messy default.
Greece, however, still faces some hurdles before it can secure such aid.
The European Union has given the fragile ruling coalition of Prime Minister Lucas Papademos until Wednesday, when euro zone finance ministers are expected to meet, to specify how 325 million euros of the 3.3 billion euros demanded in budget savings will be achieved.
By the same deadline, Greek political leaders must give a written commitment to implement the terms of the deal.
While the situation in Greece is heading in the right direction, the euro is unlikely to make significant gains versus the dollar based on factors such as the economic outlook, said Koji Fukaya, chief currency analyst at Credit Suisse in Tokyo.
"I think it will be hard for the euro to test the upside and try for levels such as $1.34 or $1.35," Fukaya said, adding that
there was not much reason to expect the euro to rise aside from the potential for short-covering.
The dollar eased 0.1 percent versus the yen to 77.53 yen.
The yen may take cues from the Bank of Japan's policy decision due later on Tuesday. Pressure has been mounting on the BOJ to set a Fed-style explicit inflation target, and the central bank may respond on Tuesday by using stronger language to describe its commitment to beating deflation.
(Editing by Sugita Katyal)
© Thomson Reuters 2011. All rights reserved.
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