For the third time in four sessions, the U.S. indices are the story of the day. The DJIA and S&P 500 are down big yet again, almost 500 and 50 points respectively. Minutes ago, the auction of the U.S. Treasuries 30-year bond produced a major surprise, with yields coming in at 3.121%, well above the previous level of 2.867%. The auction created sudden participation in the forex, driving the EUR/USD higher.

It is redundant, but the financial markets are supercharged. Volatility is on display in nearly every asset class, and that is a great thing for active traders. There are a few events scheduled for the U.S. overnight session that may throw more fuel on the already white-hot fire:

Country                           Event

Japan                             Money Supply (YoY)(Jan.), Tertiary Index (YoY)(Jan.)

Australia                         RBA Monetary Policy Statement

China                              CPI(Jan.)

U.K.                                Industrial Production (Dec.)

Canada                          Unemployment Rate (Jan.)

EUR/USD Technicals

News out of the bond market and U.S. indices has prompted a late-session rally in the EUR/USD. It appears traders are pricing a March rate hike by the FED into the market at every turn.

As of this writing, the EUR/USD is trading at a crucial technical area. It may be a bit premature, but Friday’s forex session could be one for the books.

Here are the key levels for the remainder of the U.S. session:

• Resistance(1): 20 Day EMA, 1.2293
• Resistance(2): 38% retracement of current bear run, 1.2330
• Support(1): Daily SMA, 1.2264

Bottom Line: Right now, it is too early to determine a probable scenario for tomorrow’s trade. If we close near a Doji formation on the daily chart (highly unlikely given the overall condition of the financial markets), then a major breakout above today’s high may be in order. If price wanders north or south later on this afternoon, then all bets are off.

Complex fundamentals are driving the USD. Volatility in equities and bonds are giving bulls incentive to get involved with the greenback. To be honest, there is so much mud in the water that attempting to make a definite market call at this time is a fool’s errand. As the old cliche’ goes, “when in doubt, stay out!”

However, do stay tuned for coming updates from my colleagues Rowan, Arslan, and Skerdian. They will have trade ideas and in-depth analysis facing the EUR/USD as well as a wide variety of asset classes.