It might only provide some temporary respite but some decent sized buying interest in the EUR/USD at 1.3750 looks to have halted the bearish momentum, for a few moments at least. Offers are expected to be heavy on any short-covering rallies back towards 1.3800.

Early Tokyo has taken a dislike to EUR/JPY, selling it down from 137.70 to 137.30. Those players caught long at the wrong levels might be bailing out and reassessing as this pair has certainly come quite a long way in a relatively short space of time. GBP/JPY has also met with some early selling, currently down 40 pips at 161.20. The uptrend in both pairs remains unchallenged but both have scope to drop to 135.80 and 160.00 respectively.

Another reason to be very careful getting long EUR/USD, cable or AUD/USD at current levels. USD shorts are at their highest level in almost a year, although not yet at extremes. Overall JPY positioning has flipped from long to short and the big unwind in GBP short positions has gained pace. EUR, AUD and CAD longs continue to increase. In other words, the carry trades are back in vogue. This trend has been ongoing for about three weeks so it is not yet getting close to ripe.

A rather graphic description of the aftermath of the Iranian presidential elections. Interesting insights into how Ahmadinejad got some of his support.

Here’s an interesting perspective from istockanalyst. The rise in the VIX correlates almost perfectly with the drop in google searches for Mr Roubini.

Hello all,

As you know all I recommend giving back and helping each other when possible. John Alexander aka "johnnyjet" has been with us for over three and a half years now starting with the group when it just started at a time when there was no resources including chat room and just some emails. He has helped us at times when nobody else could and it is safe to say without him there would be no Conquering The Markets trading group.

He needs some help. His nephew Alesksi (cool name!) was born in Januray with mulitple heart defects. He now has some of the coolest implanted teach you have heard heard of and he is starting to smile.

This weekend John is doing a heart walk for Alesksi the lionheart and if you would like to support him please click on the link for Alesksi.

Please keep Alesksi and his family in your prayers.

God bless all.

Peace, Jordan

With just minutes to go, US equities have given up a huge chunk of their gains. Shares sit at 944, the former high for the S&P and an important technical point on the close. EUR/USD has pulled back with stocks.

Atlanta Fed President Lockhart, a relative hawk, frets that some of the bond rate back up in recent weeks is tied to the fear that the Fed will monetize the debt. He warns that fiscal imbalances will make the Fed’s pursuit of stable growth and prices more difficult. US equities are firmer and bond yields are lower and oil maintains its strength, at 72.80 per barrel. Look for 1.4145 to cap near-term. Stops lie above that level. The euro has reached 1.4130 thus far and now trades at 1.4120. Medium-term bulls are praying for another move toward the 1.43 level to lighten up their long positions.

We are seeing US dollar weaknes across the board as EURUSD trades above 1.4040. Offers at 1.4060 look like they will be challenged very soon.

The Nikkei is sitting just below 10,000 and the Kospi has opened down -0.2%.

The latest hysteria to hit the FX market is the fear that emerging powers like China, Russia and Brazil will pull funds out of US reserves and pump them into newly issued IMF debt. There are a couple of problems with this notion. For one, the bonds are not meant to be marketable. This will be a buy and hold proposition. Central banks get into and out of Treasuries all the time and movie along the curve as they see fit. Therefore, they are unlikely to commit any more than a token amount to these IMF issues. Second: What is the largest single component of Special Drawing Rights, the quasi-currency of the IMF? The US dollar, at 44%. The EUR makes up 34% the JPY and GBP 11% each. Some diversification… The IMF move is as much political as it is economic. The BRICs want recognition as players on the international stage. Ponying up for the IMF is part of the cost of admission. To spin it in a USD negative way suits the Russians and Brazilians as they love to tweak the US whenever they can. Looks to me like another tempest in a teapot with less than $100 bln (mostly from China) heading to the IMF, leaving trillions in the dollar. Look what the Fed’s $300 bln did to the ultra-deep Treaury market…not much. The BRIC withdrawals from Treasuries has likely already been front-run by a factor of ten…

The turns come quick in EUR/USD…Prices slide all the way to 1.3914 before offers were snapped up by real-money accounts and prices soon rebounded above 1.3950 level. Oil has rebounded as well and is back on the $71 level near the close of pit trading while bond yields have backed off a touch after brushing 4$. 10-year notes are now at 3.96%. 1.3975/80 is intraday resistance on rebounds while 1.3915 is support

Exit strategy has been a big topic of discussion for Weber, Stark and others on the ECB but for Ireland’s Hurley, it is not on the radar. He says rates must remain accommodative as long as required. Policy will only be adjusted when definitive signs of significant improvement. Inflation will turn negative for a time this year but GDP will not fall as much in Q2 as in Q1, he says. EUR/USD is consolidating in the high 1.3950s as the reflation trade suffers from significant profit-taking and risk aversion rises.

Brazilian finance minister Mantega says his countries $10 bln contribution to the IMF is not intended to weaken the dollar. Maybe not, but that has been the effect thus far. The market is concerned that Brazil will dump $10 bln in Treasuries to buy bonds from the IMF. US 10-year notes are at 3.93%, their highest since last October. An auction is underway with results due at the top of the hour, which could be contrubuting to the weakness of Treasury prices. EUR/USD has rebounded back above 1.4000 on the Brazilian news.

Surprisingly strong consumer confidence numbers are supporting the AUD/USD and flows are affecting USD/JPY as the weakness in the USD from overnight shows signs of continuing. There is talk of some decent selling interest in the EUR/USD at 1.4100 but trailing stops are also said to be increasing above 1.4120.

As I wrote earlier, normally one sees USD buying and JPY selling on the 10th of the month but today we are seeing the opposite with JPY buying pushing the USD/JPY to a session low at 97.17 and EUR/JPY to 136.70. Not much in the way of bids until 96.60 in USD/JPY I’m told, but it is doubtful whether the market has the momentum to challenge thoses levels.

The Dollar is continuing to weaken across the board as markets dismiss the idea of early US rate hikes and get back to doing what they like best which is sell Dollars. Eur/Usd has moved past offers at 1.4070 with ease and is now closing in on 1.4100. Cable is in the same boat with the move above 1.6300 triggering stops to squeeze very quickly up to 1.6360. Oil also continues to climb now trading above $70 a barrel again.

More from Fed’s Fisher, says global economy still has “an awful lot of slack” and that the US Banking system has been pulled back from the brink of systemic risk. US Treasury’s Geithner has seen encouraging signs in credit conditions in recent weeks. EU’s Almunia says that EU Finmins think next quarters will show a gradual improvement in the economic situation Eur/Usd has regained its footing above 1.4000 as London dealers head for the exits. Just a warning that here in London we are expecting a tube strike tomorrow. This won’t affect this correspondent who has to travel 15 yards to work, but many trading desks in the City will be short-staffed. This may lead to choppier trading conditions.

China’s Vice Foreign Minister He Yafel says China has no intention of abandoning the dollar. Speaking at a news briefing on President Hu Jintao’s forthcoming trip to Russia, where he will attend an inaugural summit of the BRIC countries, He Yafel said that the idea of a super-sovereign currency is being discussed by acedemics, but “nobody is talking about dumping the dollar.” The USD has garnered some improvement from the comments, EUR/USD presently at 1.3900 having earlier posted a 1.3963 session high.

After gathering some positive momentum at the end of last week from US employment data, the US Dollar now faces a new ordeal. As the US Supreme Court attempts to block the sale of Chrysler to Fiat, recently gained confidence in the US economy has begun to show signs of wear. Forex traders may see added volatility to a market that was forecast yesterday to be flat. News events such as this tend to push markets in a way which traders can greatly benefit. Today is a great day to trade the USD! The Dollar moved on a number of factors in yesterday’s trading. One of the most important of these was the sale of Chrysler being blocked by U.S. Supreme Court. President Obama fears that this could kill the deal if the issue is not resolved in the nearest time. If this did happen, the effects on the U.S. economy may be disastrous. In turn, the Dollar may plummet as people could lose confidence in the American economy. In the meantime, forex traders are also trading on other issues, such as Obama’s plan for economic recovery. The Dollar rose against most of its major currency pairs yesterday, as Obama unveiled his plan to create new jobs, and tackle rising unemployment. The EUR/USD finished Monday’s trading lower by nearly 100 pips at the 1.3886 level. The USD also rose about 80 pips against the CHF to close at the 1.0934 level. However, the USD lost ground against the British Pound, as optimism returned to Britain, after the opposition Conservative party faired well in the European elections. The GBP/USD cross finished higher at 1.6024. Today, U.S. Treasury Secretary Timothy Geithner is set to be asked about the TARP (Troubled Asset Relief Program) repayments and forecasts for U.S. economic recovery in a Senate hearing at around 14:30 GMT. It would be a wise move for forex traders to open up their USD positions both prior to and after this major news event, as the market is set to be very volatile throughout today’s trading.