The 30 Year T-Bond futures have calmed down after their historical run last week. We're witnessing consolidation as investors await results from upcoming Treasury auctions to see whether yields really fall as much as anticipated. China announced it will continue to hold confidence in U. S.

Treasuries, most likely due to the U. S. government's defense of its debt via quantitative easing. However, there are rumblings China plans to diversify its foreign exchange reserves, implying the Chinese government may slow down its purchase rate of U. S assets.

The confusion is halting the rise of U. S. Treasuries since it is uncertain whether America's funds designated for quantitative easing will be able to counter the declining demand globally.

The S&P futures are posting solid gains after the government released the details of its much anticipated plan to deal with toxic assets. However, the futures are presently showing some hesitation as investors await the Existing Home Sales data.

Despite current gains, the S&P futures are still below March 19 highs, our 3rd tier downtrend line, and the highly psychological 800 level. Hence, there are several near-term landmines lying in the path of the S&P's trajectory upwards. The futures are at a pivot point considering they could easily duck back into their incessant downtrend tendency or catapult above 800. As a result, we expect high volatility in the coming trading sessions especially with the U. S.

The USD opens New York mixed this morning, higher against Yen and lower against other pairs. Overnight equities were firmer lending some support to EURO and stocks are called higher to open New York suggesting better tolerance for risk after a quiet weekend.

Overnight comments from ECB president Trichet were seen as positive for the EURO also but traders note the action so far has been largely technical two-way trade. High prints at 1.3737 again drew sellers with lows at 1.3611 attracting buyers on the dips.

Rate firms again overnight; upside extends to new weekly highs. Overhead resistance now at 1.4650 with the 1.4700 handle likely to trade the next 24 hours. Traders report stops likely over the 1.4710/30 area.

The door is open to a rally back to the 1.5000 area. Some in-range stops driving some trade over the 1.4500 area. Lows likely remain secure. The volume needs to come up and I think the shorts have yet to bail as a group; that may be starting in earnest now.

Traders report stops in-range adding for two-way action. Long-term tech resistance now at 1.5000 area likely to cap near term. Two-way action continues suggesting that shorts are aggressively adding and longs are trying to find a bottom. 

Rate follows GBP in two-way action and holds gains but is not advancing as aggressively yet. Stops likely building above the 1.3740 area. Upside stops

likely cleared in size and if the rate can close above 1.3650 area more upside is likely.

Overhead resistance above 1.3350 area negated so a pullback to there would also be a strong buy. Traders note big names on the buy side on dips

overnight; semi-officials and model accounts buying above 1.3400.

Russians seen on the offer overnight in Europe. Bulls are likely in control of the market and any significant pullback is a buying opportunity in my view. Expect two-way action.

EUR/USD Daily

Resistance 3:  1.3980

The USD/JPY is recovering from its earlier losses and has climbed back above the psychological 95 level and our 1st tier downtrend line.

Furthermore, the currency pair is fighting above our near-term trend line showing investors are hesitating to capitulate. Despite the recent stability, the medium-term downtrend is back in control after the USD/JPY decided to head south out of the February trading range.

The quantitative easing actions of Japan and the U. S. are now competing against each other in terms of severity vs. GDP. Investors are showing the quant. easing of the U. S. overcomes that of Japan for the time being.