<span style="text-decoration: underline;"><strong>1. INTRODUCTION:</strong></span>

"It's enough to drive you to drink" this is a very common phrase used in times of frustration......this sums up the Forex market for me right now. Correlations are great indicators........well we can forget about most of these at the moment...there are bugger all correlations taking place presently.
<p style="text-align: left;">I just love it when we can say we had a meltdown in metals...well it happened yesterday, Gold, Silver and Copper all fell very dramatically, especially Gold which closed below $1500. It looks like it's heading to $1300 now. Keeping correlations in mind, Gold, Copper and Oil (WTi) ....."The Holy Trinity" all fell sharply yesterday, yet the USD never really strengthened...... Guess who  is long the USD? Yes, I am big time the USD long and I am holding sizeable negative positions over this weekend with trades in the following pairs:</p>

<ol>
	<li>EUR/USD - short (100% position size)</li>
	<li>NZD/USD - short (25% position size)</li>
	<li>USD./CAD - long (25% position size)</li>
	<li>USD/JPY - long (50% position size)</li>
</ol>
If that wasn't enough a U.S. Treasury spokesman, after the Wall Street close was reported to have said that Japan "Should refrain from competitive devaluation and it should adhere to G7/G20 commitments"........sounds like the pot calling the kettle black. I placed my stops good and wide to cope with volatility but  after the JPY strengthened in the last 45 minutes of trading my stop was nearly activated. Suffice to say, the Tokyo open on Monday (Sunday night for us in North America) will be interesting it will either be a huge continual drop or one hell of a bite back.

For most of the week, I was a little bored. I felt that the Fx market was on hold just waiting for the USD/JPY to break through 100.00. Therefore apart from a lone long USD/JPY trade that I have been holding for a few days.  It was the "Holy Trinity" move lower yesterday, Gold in particular, that really caught my attention and caused my fingers to hit the keyboard. As/if  Gold drops I do think that the USD will strengthen and catch up, plus the commodity currencies will/should also play catch up if Silver and Copper continue to stay under pressure.

Yes...it's enough to drive you, in this case me to drink (Believe me, it would not be a long drive), when you are looking for correlations and lead indicators to perform and guide you  .....but when they don't the market becomes difficult to follow and understand.

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<span style="text-decoration: underline;"><strong>2.  THE VIEW FROM MY TRADING DESK:</strong></span>
<p style="text-align: center;"><strong>NOW IT'S CYPRUS SELLING IT'S GOLD...THE EUROZONE IS SO F***ED UP...WE JUST NEED DRAGHI AND MERKEL TO FINALLY ADMIT IT</strong></p>
Up until Friday morning prior to the European open the EUR/USD had traded most of the week  in a tight range 1.2900 - 1.3150. It ended the week still in this range but at the European open yesterday the Cyprus f**k up came back to the brim once again. This time, Cyprus is rumoured to be thinking about dumping part of it's Gold reserves to fund it's need for more cash as the Eurozone agreed package and the "Bail-in" monies are now not going to be enough.....quelle surprise.

Regarding the Cyprus situation, you do not need an extraordinary high IQ, be a member of Mensa, or, be a qualified brain surgeon.....just a bit of grey matter between the ears will do to see that what was originally agreed was not enough.......that in itself precludes most of the numpty politicians hovering around the Eurozone. All of the back tracking after the initial screwed press release of the "Bail In" affecting all bank depositors, coupled with the speed to have a deal, shows all the negotiation skills of not looking beyond the end of your nose. It was inevitable that a requirement for increased monies would be required, and I strongly suspect that Draghi and Merkel hoped that this requirement for more cash would have been necessary after bank credit controls were removed not before. This shows how bad Cyprus is. Given the short time period since the "Bail-in",this announcement just beggars belief, I was astounded, but given the Eurozone history on these matters, I shouldn't have been so surprised.

I blogged two weeks ago that Cyprus could be the biggest Eurozone f**k of all time. In my mind right now, I am more convinced than ever that unless the Eurozone politicians (in conjunction with the ECB and the IMF) get their house in order to either support the member states 100% as per the constitution that they all signed, or cut out the periphery countries, Cyprus will be the trigger on the contagion effect. There will be a lot of nervous politicians around Europe this weekend, plenty of shaky hands pouring out their corn flakes in the morning catching up on overnight news and reading the morning papers.

So Cyprus needs more money. Will the Cypriot government just sell some of it's Gold reserves or just increase the "bail-in" as no-one has been able to withdraw their money from the Cyprus banks yet?  If the Eurozone politicians naively believed there would not be a run on the banks in Cyprus because they were taking the heat out of the situation by their credit control policy, they well and truly got that wrong. Cyprus is going under big time, there will be a run like olympian 100 metre sprinters when normal banking facilities are open again.

The Eurozone, I believe mainly Germany, is pushing Cyprus under a bus, and a big one it is. Despite what Draghi says, to me he has shown his true colours, he is only a puppet of Berlin.  This is a dangerous tactic/strategy that is being played as the knock on effects could break up the Southern Eurozone members and the periphery issues will disappear overnight.

The contagion is on.....Cyprus only has banking and tourism to create wealth. Banking is no more, completely screwed and tourism will be hit hard as prices for tourists will no doubt rise. Greece is linked to Cyprus in so many ways, there will be a spill over.  As I have blogged numerous times before, Spain is a headline away from sending the EUR/USD to 1.2000 and Italy is so f****d up politically car registration plates should contain the strap-line "The land of turmoil". Portugal is  also on the point of requesting aid, Slovenia now on the brink..... The Eurozone single currency one size fits all just does not work......

I am sick to the back teeth of hearing politicians and the ECB say all is good and improvements are in the pipeline....the Eurozone is in a deepening recession and people who are only on the planet once are being put through hell in the name of austerity that is NOT working...it is just creating pain for voters and  for the countries involved longer unemployment lines and bigger social problems that they cannot fund in the short-term, never mind the long-term.

This is a f****ing disaster. It is almost a "West End farce" It is about time that Draghi and Merkel in particular, take the lead  and provide an escape route for the periphery by allowing them to bring back their own currencies re-value them, clear the debts and through Eurozone trade aid, create a path for them to stay in the Eurozone but not members of the single currency group.

The Eurozone is totally f****d up and I know that the leaders and ECB will never admit this, but they must be really dizzy from all the "Spinning" going on.

All that being said, what trades are potentially ahead.

The drop in metals yesterday and the fall in crude as well would normally just strengthen the USD. The EUR/USD in particular was very stubborn and stayed very close to 1.3100 all day after recovering from 1.3040 in the morning as the "Gold" news was released.

I am short the EUR/USD. I am going to stay short as long as we stay below 1.3180. My thoughts are that the effects of the Gold and Oil sell off has not yet been reflected in the USD and if Gold does continue to head lower the USD will strengthen accordingly. My thoughts are a break below yesterday's 1.3040 should open up a move towards 1.2960, maybe lower. As with all trades, I will either be right or wrong!!

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<span style="text-decoration: underline;"><strong>3. LONGER-TERM TRADES:</strong></span>

I have no long term trades at the moment.

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<span style="text-decoration: underline;"><strong>4. LOOKING INTO NEXT WEEK....THE KEY SUPPORT AND RESISTANCE LEVELS WITH THE USD MAJOR PAIRS:</strong></span>

<strong>EUR/USD: Closing Price 1.3111.</strong> I have mentioned this pair several times in the blog with my trading thoughts.....to confirm the range 1.2950 to 1.3160.

<strong>GBP/USD: Closing Price 1.5342.</strong>  We sit on support at 1.5340. Below here is 1.5250 and above resistance sits at 1.5420.

<strong>AUD/USD: Closing Price 1.0507.</strong>  With this pair closing the week just above 1.0500 there will be a few traders who would have preferred below 1.0500 to give a more bearish tone. The facts are with the "Holy Trinity" sell off, the commodity currencies initially sold off well but then held up as equities didn't follow lower. Looking ahead, 1.0400 is support and 1.0630 is resistance.

<strong>NZD/USD: Closing Price 0.8587.</strong> A nice sell off with this pair yesterday. Like other pairs if commodities continue to sell off this pair should fall as well. We sit mid range, support is at 0.8530 and resistance is at 0.8675.

<strong>USD/CAD: Closing Price 1.0135.</strong> The CAD led the way yesterday initially and sits at the mid point of my range...support is at 1.0050 and resistance 1.0240.

<strong>USD/CHF: Closing Price 0.9271.</strong> I have been ignoring this pair lately. The range is 0.9240 to 0.9410.

<strong>USD/JPY: Closing Price 98.36.</strong> Wow....what to say about this pair is tricky given the U.S. Treasury comments late in the day yesterday. 98.00 is a big level of support, below here is 97.50. Resistance is at 100.00.

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<span style="text-decoration: underline;"><strong>5. THE MAJOR NEWS EVENTS AND FX NEWS EVENTS THIS COMING WEEK:</strong></span>

SUNDAY: JPY - BOJ Kuroda Speaks
SUNDAY: CNY - GDP

MONDAY: JPY - Kuroda Speaks

TUESDAY: GBP - PPi, CPi and BOE Inflation letter.
TUESDAY: EUR - ZEW Sentiment.

WEDNESDAY: GBP - Claimant count change, MPC meeting minutes.
WEDNESDAY: CAD - Interest rate statement, Policy report and RBC press conference.

FRIDAY: CAD - CPi

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<span style="text-decoration: underline;"><strong>6. FINAL COMMENTS AND CLOSING THOUGHTS:</strong></span>

Tomorrow nights  and the Tokyo open should be an interesting two or three hours to follow.  If you are not already in a trade I would sit back and watch rather than jumping in as I can only imagine there will be massive swings in the JPY pairs. In addition, Kuroda speaks twice once Sunday night and once again early Monday morning before the European open. This should add some spice to the start of the trading week.

There are one or two tasty news events in the week. I will be watching the GBP closely. After the 1,000 pip sell off we have rallied back and as the world should know by now the UK economy is in very, very poor shape. I think that we could be heading back to 1.5000 again, if the data dump this week falls the right way for bearish traders.

As usual trade clever, trade within your money management limits and keep to your trading plan.

Good luck,

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Scott Pickering
The Pip Accumulator
Saturday 13th April 2013.

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