Trend following the European Majors & Cross Rates

The initial reaction in Asian/ European markets have obviously been negative from the S&P's downgrade AA+ for the US. The continuing beneficiary is still the Gold market, as prices for the yellow metals have reached the USD1715.35/oz. high. While the soft opening for the USDX held at the important levels of 74.40 basis point with a short lived low at the 73.97. The trading range between 73.28 and 75.10 are critical points of its range where any particular break through the high above and maintaining a close at the 75.50 will build momentum to the next target levels. Of course, this is the speculative outlook for bullish USD players. As a rush to flight to quality USD Treasuries may be the catalyst to a bull USD market. However, this would be contrary to investor's current preference for Gold. As most central banks have done so by increasing demand for the precious metal. A slight inclination of a report for increase margin requirements for Gold may somehow spook the market at any given time. Nonetheless, these fundamentals and market trend may not go away that soon.

The EURUSD has been given a short lifeline from the ECB purchasing Italian and Spanish Bonds and lent support for the Euro for the time being. However, the overall sentiments remain uncertain for the market participants. Although, we still remain true to our bias sentiments for the EURUSD & EURGBP cross to move lower. Particularly the EURGBP were a retest of breaking 0.8660 for the 2nd time maybe attained. As the previous week's low did moved to 0.8642 low and met some liquidation, profit-taking for others.

GBPUSD would be steadier to lower as it paces with the EURUSD from hereunto. But the technical outlook for the GBPUSD on chart formations is still bullish. Thus providing support for the EURGBP cross to move lower in an orderly fashion. We have decided to stay the course for the EURO and cross rate as it has been our benefactor providing us with the additional equity built in through the past months.

Meanwhile, USDJPY has given its signal of a probable price reversal for the coming week as the MOF in Japan have continuously talking intervention even after their move last intervention in the market place. 76.28 again, is a pre-WWII levels which will be the basis of support from hereunto. Although, as we also mentioned these are exceptional times and where exceptional price action happen. In essence, we still would not be surprised if and whenever prices again make an attempt to gain Yen strength for a 2nd swing. We'll have an open mind for USDJPY and USDCHF for the current week and observe more closely price behavior for the European majors and USD movements. Any sudden changes may well be lurking in the market place even as of this writing.