Archived IMT (2011.03.10)

Just when all eyes were fixated in Portugal, Moodys downgraded Spain to Aa2 with a negative outlook, sending EURUSD towards the $1.38 trendline support. This level must be held this week (close) to avoid prolonged losses to as low as $1.3660s. EURUSD has yet to break above the 3-year trendline resistance reiterated over the past 3 weeks. THOSE WHO TRADE FX ON HIGH MARGIN have been stopped out or margined out of positions in AUDUSD, GBPUSD and EURUSD, but each of these pairs continued to respect the important resistance levels of 1.02, 1.6350s and 1.4320s respectively. AUDUSD rests on the 1.0030s support. A close AT parity would be deemed a a break of this trendline, thereby paving the way for 0.992s0. UK industrial production and manuf output both beat expectations at 4.4% and 6.8% y/y respectively, but we could well see this as an opportunity for shorts to pile in near $1.6190-1.6220s ahead of what is expected to be a no-rate hike from the BoE, with the renewed downside falling on the back of the latest bout of risk aversion. USDCHF eyes a gradual retest of 0.9380, followed by a possible 0.9460s into next week.