That's 9 up day's from 9 sessions for the Dow Jones 30, the longest winning streak in nearly 20 years and another all time closing high 14460! When will this rally end! But another thing to note is that yesterday was the lowest volume today of the year, so institutional and smart money are obviously sitting on the sidelines as they are not prepared to have a position with the Equity market too over extended to take a long position and with no bad news on the horizon to allow it to correct properly.
The Markets this week have take a real breather and can not seem to find a direction after the brilliant trend we have had for the first couple of months in 2013.
Yesterday saw the release of U.S. retail sales which came in at 1.0% from a estimate of 0.2%! This added to Dollar strength and tanked the EUR/USD to new 2013 year lows at 1.2920 from session highs of 1.307 earlier in the session. At this rate we reckon a test of the 200 Day Moving Average at 1.2850 may well be on the cards sooner rather then later. The downside area from 1.29 through to 1.28 will be extremely well protected by Asian central banks and Sovereigns protecting big DNT option interest and will likely be defended aggressively. We believe a Long EUR/USD trade could be prove a high probability set up with an entry point somewhere between 1.29 and the 200 Day MA at 1.2850 with a stop below 1.28 targeting 1.33.
Overnight we saw some extremely strong Australian Data which has given a boost to all the commodity Currencies and Commodities in general. This has led to a risk on sentiment across all asset classes this morning with the DAX at 8040 as I type and Bund futures at their lows. We have also seen a tightening in Italian and Spanish Bond spreads over the German bench mark and the Italian FTSE MIB the notable outperformer up nearly 1% in early trade.
A fairly sparse week for data releases and today is no exception with the only notable tier 1 data from the States being the weekly initial jobless claims.
Some notable levels to look out for on the EUR/USD today are 1.2920 downside and 1.2980-1.30 topside.
USD/JPY has broken out again this morning and we would look for a pull back again towards 95 before entering a long targeting 99 but the pull backs are shallow as the trend is so strong.
We have illustrated some technicals on our Bloomberg to show the entry point we are waiting for to trigger a long EUR/USD Position. You can see the 50% Fibonacci retracement of the rally from July to February co-inciding with the 200 Day Moving Average. The exit point of 2/3 of this the trade would be 1.3266 and leaving the additional 1/3 to run targetting 1.33-1.34 with the stop loss being adjusted to 1.3180 once 1.3266 has been hit.
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