Client Note -- Monday trade brought with it a lot of wheel-spinning, a large dose of expectancy, and an overpromise and under-delivery in regard to the potential reaction to the European banking stress-test results. Recent trade desk client notes had warned of the reaction to the EBST being muted, as those pulling the strings tempered expectancy with reality, and worked hard to deliver the message in a very controlled format.

Now that the noise has abated, the attention turns to risk ratios and earnings reports as the European markets prepare for six weeks of vacation-level volume that may at least reduce the intraday volatility that has two or three 30 minute candles carrying most of the daily 2% moves in most markets.

Global markets were far from correlated in early trade, with the USD coming under pressure from most currencies, in-line with 4-hour chart trend and momentum reads that have the dollar index struggling to break 82.70 resistance. A test of 81.00, which is some 200-300 pips away on each of the major pairs, is the next main area of support for the dollar, but only if the S&P futures market can hold 1100 on a weekly chart close.

With a break and hold of 1100, a test of 1100 looks to be achievable, and that from a technical perspective will free the equity market up for a potential 4%-5% move before the next main resistance area kicks in.

The short side of the S&P market looks to be well supported at 1075, with a weekly close below that area drawing in 1050 and 1025. Forex trader will have noted that global correlations are weak at the moment, but still favoring the long side of risk in the near term.

Forex Movers -- GBP looks to be the most bullish currency at the moment, running on the back of economic outlooks that have stabilized, and a sanitation that comes from being widely immune from banking stress-test fever. 1.5250 is major support with 1.5550 major 200-day SMA resistance.

CAD has found buyers against the USD as commodity trading links aid the interest rate differential in the near term. AUD now has to re-test support at 0.8950 just one last time it seems, so that traders know the 200-day SMA will be a solid foundation from which to move higher.

Forex Shakers -- JPY found buyers, in-line with S&P futures trade initially dropping lower on the first session of the week, and it is clear that traders are not in love with the long side of USD/JPY, whatever the Bank of Japan intimates it will do to intervene in excessive yen valuations. The USD/JPY trading channel is 85.50 and 87.50. EUR and CHF look lost as the banking stress-test results are absorbed.

Global Risk -- S&P trade is playing with the 200-day SMA area at 1105, and will signal a positive stance if 1110 is broken on a weekly chart close. European and Asian equity markets look lost.

Global Demand -- Crude oil traders are holding support on WTI at 78.00, with a weekly close anywhere above 77.00 signaling a bullish undertone for global demand markets.

Trade Desk Thoughts -- Buy support on the major currencies rather than buying breaks of resistance against the USD.
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