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

Last week was a very interesting week for me. I traded very heavily on Monday (The largest trade sizes of 2013 so far), mainly the commodity currencies that dropped on the back of the metal meltdown of Gold, Silver and Copper. Do not forget WTi as well. The NZD/USD, in particular I hammered short. I even tried the USD/JPY short for a few pips. I kept faith with the commodity currencies towards the end of the week;  AUD/USD and NZD/USD short and the USD/CAD long. Good pip profits...happy days!!

The continual weakness in copper is fascinating me. I do feel that we are seeing an end to the bullish run in equities. We are certainly seeing lower daily highs, this is telling. Maybe the U.S. traders daily routine of buy in the morning on dips and sell later on in the afternoon is coming to an end. If equities do start to roll over the AUD/USD will drop like a bat out of hell. I will re-enter long the USD on pullbacks in the three commodity currencies mentioned already as early next week as possible.

In the news; Gold finally falls, or should I say collapses. It's been threatening this drop for sometime, and after a little consolidation period, I believe the downside move will start again. Next time I believe $1,300 per troy ounce is in the mix and possibly even lower to maybe $1,100. Then we had Fitch's downgrade of UK debt, following the move made sometime ago by S&amp;P. Earlier in the week Egan-Jones downgraded German credit rating from A+ to A on the basis that there is a lack of will to stimulate the Eurozone.

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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>THE EUROZONE.... WHAT A MESS; I JUST DON'T GET IT...THE POLITICIANS MAKE IT WORSE</strong></p>
This is the fifth week on the run that I have written my main blog piece about the Eurozone.....you should not be surprised.

I am just gobsmacked that no matter what happens news wise in the Eurozone the opportunity to control the response is always screwed up because so many people want a say on the subject matter. That would be fine, but the conflicts and difference of opinions from the finance ministers, country leaders and ECB members, (whilst in the initial stages were seen as a strength are now a just a huge...massive weakness) just mislead the markets and fundamentally create confusion. If the Eurozone needed confusion to operate effectively rather than clarity, it would be the most efficient trading and economic area in the world. Instead we have the total opposite...a clumsy combination of inept politicians who, if were locked in the Guinness brewery on a Friday night, left over the weekend and when you called back on Monday morning they would all be stone cold sober!!  The way the press statements, media sound bytes and twitter comments break to the market creates confusion and as we all  know the markets hate confusion. As traders we sometimes like confusion because it can help with creating volatility that can help us with trades. However, if you are  longer term traders, you really want a trend and the Eurozone does not deliver this and if you examine moves in the EUR/USD so many a sharp spikes either up or down reacting to political statements. It makes the EUR/USD difficult to trade at times.

This week.....Cyprus, Slovenia, Italy, Spain and Germany all hit the headlines for various reasons. Only 5 out of 17 member countries in the news this week on major headlines..... not bad for the Eurozone. Add to this the start of the build up to the next ECB press conference with the riddles about rate cuts being on or off. and it all creates more volatility and spikes higher and lower.

I blogged a couple of times about the last ECB press conference and how disappointed I was with Draghi's performance, in fact, I believed he was less than truthful with the press. He looked very uncomfortable at all times. Allegedly, there were no discussions on interest rates. Yesterday, both Wolfgang Schauble (German Finance Minister) and Jens Wiedmann (German Bundesbank President and member of the ECB Governing Council) continued the press releases that started on Wednesday by Wiedmann, over whether or not the EUR/USD was trading at appropriate levels and whether or not the ECB interest rate should be cut from its present 0.75%. These releases caused spikes higher in the EUR/USD.

I tweeted yesterday that 1.3125 was a great place to short on a spike high. If you did this you could be +75 pips up as the EUR/USD fell back into downward trend and ended the day at 1.3048. If you think about this discussion on interest rates, the same happened last month, yet we were told there was no discussion at the ECB meeting prior to the press conference...yeah right.... complete bulls**t from Draghi and the press and markets bought it...numpties!!

The bottom line i,s as I have tweeted this past week is......there is no good news in the Eurozone. It continues to deliver poor economic data after poor economic data and the politicians in conjunction with Draghi simply do not know how to plan to minimise the effect or more importantly provide a credible action plan on how they are going to tackle the problem and what measures if any they can implement to rectify. I know Draghi has his EFSF, OMT etc etc. These do nothing for the day to day management of trying to get growth into an economy.

Cyprus, Greece and Slovenian banks are down the "Swanee River" without a paddle...... Remember that the non existant.....but it is definitely there.... "Bail-in" template that  is not yet gathering dust from the Cyprus f**k up will be out again soon ... The banking problems in these countries are way above the Politicians who are about as useful as a chocolate teapot.....completely helpless.

Unpaid regional debt bills in Spain are rising, it is now at Euro 42 million, with the Madrid region number one on the charts of worst offender, replacing Catalonia. As Jack Nicholson says..."Somethings Gotta Give". As I have blogged and tweeted for over a year now, Spain is going to pull the Eurozone apart. Politicians are in complete denial. Rahoy (The Spanish Prime Minister) has a massive social debt burden and there is no way can he bail out the regions.

Then there is the fall out from the Italian election. It seems like they were held years ago, not months, given the amount of time this story has been around. Yesterday, the fourth election to find a president (not a government leader) ended in failure......rumours of various politicians resigning followed. This is boring, boring, boring and another election will probably be the outcome....eventually that is. Politicians cannot agree on a way forward with "The Clown" in particular wanting nothing of a coalition. Plus nobody wants to work with Togaman (Berlusconni).

Finally, Germany.....Egan-Jones downgrades German credit on the fact it has "No will" to stimulate the Eurozone. At last the feck**g truth for once. Germany, could not give a hairy rats ass about stimulating growth in the periphery. This is the fundamental problem in the Eurozone right now......austerity is not working, and, without Germany on board with stimulus growth policies, we will watch the Eurozone limp from one calamity to the next. The German politicians have laughed off  this downgrade, they are not interested or concerned and because they are Germany, 'numero uno in the Eurozone no tin pot U.S. rating agency is going to tell them the error of their ways...... they are not moved on this subject and they will not change direction.

So with all this being laid out on a table in front of us as traders, how do we trade?

I firmly believe that the Eurozone is like a dysfunctional family, and, it is only heading one way....lower. Should a rate cut to 0.50% be in the offing this will further send the single currency lower (weaker). The EUR/USD is only really at the 1.3000-1.3150 level because of FED action supporting U.S. equity markets to the tune of $85 Billion per month. Can you imagine if equities start to roll over and the ECB cut rates...where does that leave the EUR/USD?

My targets on the EUR/USD are as follows: -
<ul>
	<li>
<div style="padding-left: 30px;">The continual weakness in the EUR/USD from the day to day country issues: I see a test of 1.2950 first and if we break this level I see a test of 1.2750 next.</div></li>
	<li>
<div style="padding-left: 30px;">Equity markets correct and pullback. The S&amp;P below 1530 is key, if we see a 10% pullback: 1.2750 will come into view quicker. Then a test of 1.2650 should be on the cards.</div></li>
	<li>
<div style="padding-left: 30px;">An ECB rate cut in addition to the above: Over a period of two/three months I think a test of 1.2000-1.2250 This is potentially a 1,000 pip move from current levels but the Eurozone is in such poor shape the Monthly long term chart trend line could be tested in the longer term.</div></li>
</ul>
<span style="text-decoration: underline;"><strong>3. MY LONGER TERM TRADES:</strong></span>

I have no long term trades in play at the moment.

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<span style="text-decoration: underline;"><strong>4. LOOKING FORWARD...THE KEY SUPPORT AND RESISTANCE LEVELS I WILL BE LOOKING FOR WITH THE USD MAJORS.</strong></span>

<strong>EUR/USD: Closing Price 1.3048.</strong> We are in a trading range effectively from 1.2950 to 1.3200......although towards the end of the week the resistance level seemed to be a little lower at 1.3125.

<a href="https://weeklyfxdrivethru.com/wp-content/uploads/2013/04/EURUSD-MONTHLY-200413.png"><img class="aligncenter size-large wp-image-1651" alt="EURUSD MONTHLY  200413" src="https://weeklyfxdrivethru.com/wp-content/uploads/2013/04/EURUSD-MONTHLY-200413.png" width="660"  /></a>

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<strong>GBP/USD: Closing Price 1.5226.</strong> The Fitch debt downgrade yesterday brought the support level lower in this pair from 1.5250. This level will act as resistance over the next day or so. In recent times the markets have dismissed the credit agencies as pointless behind the event companies with their gradings so do not be surprised if the European market on Monday morning shrugs off this downgrade and the GBP rallies a little. Bear in mind 99% of news from the UK is poor so I think we are heading lower. If the EUR/USD heads lower the GBP/USD will come lower screaming and complaining. The only caveat I have is that the "Cross-Rate" effects are being felt much more than usual. The commodity weaknesses are the main reason and the GBP/CAD, GBP/AUD and GBP/NZD are all playing their part in maybe restricting the moves in the USD majors. That said the levels to watch going forward are 1.5150 to 1.5420.

<a href="https://weeklyfxdrivethru.com/wp-content/uploads/2013/04/GBPUSD-WEEKLY-200413.png"><img class="aligncenter size-large wp-image-1650" alt="GBPUSD WEEKLY 200413" src="https://weeklyfxdrivethru.com/wp-content/uploads/2013/04/GBPUSD-WEEKLY-200413.png" width="660" /></a>

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<strong>AUD/USD: Closing Price 1.0275.</strong> We sit at a key line in the sand level. 1.0280 is a key support level....we are there. If we continue lower, we will soon be testing 1.0150 then parity. There are many factors that can send this pair lower, Copper, Equity market weakness, Gold, China economic data, RBA interest rate policy to name but a few. Personally, I do see this pair trading sub parity and the calls for 1.0800 and above that I have read from time to time should have happened by now given the rise in the Dow Jones and S&amp;P to record highs. Quite frankly, the AUD/USD should have been at 1.1500 given the equity markets rise. In reality we have struggled to beat 1.0580. Therefore my bias is lower.....there are many pips to be made, you just need to be patient. The range that I will be looking at is 1.0150 to 1.0400.

<strong>NZD/USD: Closing Price 0.8412.</strong> We closed just above key 0.8400 support. The range that interests me is 0.8350 to 0.8510.

<strong>USD/JPY: Closing Price 99.47.</strong> The Abe-Kuroda show continues. One minute I read that's it...no more weakening..."We have gone far enough".....then it's a pullback to 95.80. Next we had turncoat Christine Lagard (DSK's replacement as head of the IMF) contradicting an unnamed spokesperson from Washington saying that Japan should play by the G7-G20 rules and stop deliberately weakening the Yen. The USD/JPY strengthened on the Washington press release and then after Lagarde's news conference the Yen weakened, and to add fuel to the fire Kuroda popped up out of the blue to say...."We are still weakening......we have our targets/objectives to meet". The upshot of all this is that the USD/JPY weakened into the weekend and closed at 99.47, in striking distance of 100.00 once again. Don't stand in front of the runaway train is a statement worth noting.....I do think that if we break 100.00 I am very tempted to say that 105.00 could be on the cards. Certainly, I think the momentum over 100.00 will push this pair towards 101.00 quite quickly. Will we break 100.00? is the question. The range I am looking at is 98.50 to 100.00 in the short term.

<strong>USD/CAD: Closing Price 1.0263.</strong> We are at the point of a breakout with this pair. The only problem is we have been here before and failed. Critical resistance is 1.0340. A break through this level and my thoughts are looking towards 1.0500-1.0600. Support is 1.0190 then 1.0150.

<strong>USD/CHF: Closing Price 0.9337.</strong> I was sitting with my fingers on the button Friday to get long this pair. There is an inverted Head and Shoulders pattern  in play if the neckline of 0.9340 is broken. The measured move on a neckline break is to target 0.9480. Support is good at 0.9280.

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<span style="text-decoration: underline;"><strong>5. MAJOR  FOREX NEWS EVENTS COMING UP THIS NEXT WEEK:</strong></span>

MONDAY: CNY - HSBC Flash manufacturing PMi.

TUESDAY: EUR - French and German Flash Manufacturing PMi.
TUESDAY: NZD - RBNZ Interest Rate Decision and Statement.

THURSDAY/FRIDAY: JPY - BOJ Press Conference and Monetary Policy Statement

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

Whilst it may look a little light on news events next week, we are at yet another crossroad in the markets both Equity and Forex, and, in addition, many major pairs are at key support or near resistance levels. I see the USD only getting stronger as the weeks roll by, given the weakness in metals and the commodity currencies. As I have said many, many times before.....commodities lead the way, then bonds, and equities are nearly always the last to arrive at the party. We have not had the usual inter market correlations in place for quite sometime now and I really feel a sentiment change is a-foot...so be careful, moves could be dramatic and telling.

Trade lean and mean with wider stops, smaller position sizes and operate within your trading plan.

Good luck,

Scott Pickering
The Pip Accumulator
Saturday 20th April 2013