Forex Investment and Currency Trading

Gold has posted a weekly close at new highs and further gains are expected for up to $1,300 over the coming weeks and possibly months. EURUSD has also posted a weekly close above 1.4720 (Dec ’08 high) which is a bullish medium term break even if the market remains choppy in the short term. In other markets we have seen a good hold of support level on U.S. long end yields (30 year, 10 year and 5 year) and expect higher yields going forward. This is leading USDJPY higher and in a general USD bearish environment, JPY crosses are performing well.

Fixed Income and Foreign Exchange– We have a good break in Gold and EURUSD posts a weekly close above the 1.4720 level. Long end yields are expected to move higher.

Gold: Rallied and posted a weekly close at new highs. The reverse head and shoulders pattern that has been forming since the early part of 2008 suggests a test of the $1,300 area over the weeks and months ahead. This is believed to be a good break and the start of the next leg up in this long term bull market in Gold.

EURUSD: Posted a weekly close above the 1.4720 level that market has been focusing on. While the pair remains choppy in the short term we would not be surprised to see further gains up to the next set of resistance levels around 1.4960-70.

USDJPY: Bounced back and is appears that the move up in yields has led to the turn in USDJPY. We still need to see a close above the near term resistance level at 90.12 which would open the way for further gains in the short term to 91.73 and then 92.50+.

U.S 30Y, 10Y and 5Y yields: Long end yields have turned from the support levels. Resistance levels have been breached and we would to be surprised to see a test of this year’s highs in yields over the weeks and possibly months ahead.

EURJPY: Bringing the above dynamics together (higher yields and higher USDJPY while EURUSD has posted a bullish close) would suggest gains ahead for EURJPY. The pair has failed to close below the 55 week moving average again and the short term 76.4% Fibonacci retracement against the lows suggests further gains ahead. We would not be surprised to see a test of 135.50 in the short term and possibly 138.72 – 139.26 beyond that.

USDCAD: Continues to trend lower and we would not be surprised to see a test of parity.

EURGBP: The trend resistance pointed out last week did not lead to a deep correction down but instead a consolidation. The uptrend is back in play and we continue to expect of 0.9491.

AUDJPY and NZDJPY: AUDJPY is approaching the trend resistance (and short term target) at 82 and a close above there would suggest a move up to the 200 week moving average at 87.50 is likely gong forward. NZDJPY is also approaching resistance levels around 66.38 and 67.75. A breach of that would be a bullish development.

AUDNZD: Posted a bullish weekly reversal at the trend low and is now testing the converged trend and horizontal resistance at 1.2450-70. A close above there would open the way for 1.2684-93.

FTSE 100: Makes new highs for the uptrend and is approaching good resistance around 5,338 – 5,411.