Trade Team Update

We certainly had an interesting start to the week... for the most part the euro slid easily to the downside just as we suspected it would... this lasted until early afternoon in the NY session when the markets got hit with some heavy money flows and the market correlated variables went a little nutty...

The Dow took a nosedive and that got the ball rolling... at the same time oil and gold did an about face and scaled back their losses, the 10-year yield lost about 10 points, and the euro pushed up to the 1.5750 level after making a session low three pips from my key downside level of 1.5607.

The EUR fundamentals were abysmal today and this helped keep the EUR under pressure in early morning trading. Once the USD- money flows hit the markets it was relatively easy for the euro to push above the 1.5700 level and it's now sitting comfortable around the 1.5720 level.

Tomorrow:

Tomorrow is our first big fundamental day of the week as we get Pending Home Sales, and two Fed speeches: Bernanke and Lacker. Bernanke is not specifically scheduled to speak on monetary policy but Lacker is.

You can be assured the market's will dissect anything and everything the Fed says. Today, San Fran Fed Yellen gave a very dovish tone to the credit market and to the U.S. economy as a whole.

This week will be a good test to see how serious the Fed is about a strong dollar... the central bankers and their rhetoric are going to reacted to by the markets, this you can be assured of...

Pending Home Sales should print at or slightly above market expectations, but regardless, we will not see the major upside we got last go around and overall this data should remain USD-. An upside surprise on this data will likely give the USD a boost, but don't forget we have Bernanke speaking two hours before the home data is released...

Although not a market mover, it's important we take a look at the Consumer Credit data released later in the afternoon. This piece of data is key because the U.S. economy is so heavily dependent upon the consumer to have access to lines of credit, to take out home equity loans, to take out second mortgages, and to keep adding debt to credit cards, retail credit cards, etc.

The sharp decline in lines of consumer credit has directly correlated into the sagging retail sales, sagging car sales, and the overall pullback of the consumer.

EUR/USD:

The moves we saw with the euro today were really nothing to take any note of and probably won't mean much going forward the rest of the week...

The market remains very ill-liquid and this makes the overall trading environment a little tricky.

As far as trading goes I'm treading lightly until the market gives more clarity within the price action... I absolutely beleive we can easily make another run at the 1.5850-1.5900 level but the euro will need some positive money flows and we'll need to break some key levels on the way up in order to gain the momentum required to at least sustain a break of the 1.5800 level.

Commodities were very weak today but we didn't see a tremendous amount of euro weakness in relationship to the commodities weakness and this is something worth noting. The correlation between the EUR and the Dow seems to be back in stronger effect... should equities continue to sell off and stay to the downside this will only keep the EUR supported vs. the USD.

My tradeplan for the most part will remain the same -- buy the dips, short the rises, and remaining overall bearish on the euro... on all accounts I freed up between 1% and 4% usable margin by taking profits on entries and this will give me even more freedom to operate under these shaky market conditions. Right now I do not have a single account with anything less than 95% usable margin, so there are no worries in that regard.

Right now price action is a touch to the upside but of course it's early and conditions are terribly thin... later on this evening when we get more liquidity I'll post my key levels.

Be smart with your trades and be smart with your margin usage...