Rate two-way and recovers after a marginal new low into support overnight. 23 year lows in sight but the rate is attracting bids. Reversal off weekly lows a positive technical but the volume needs to come up and I think the shorts have yet to bail as a group.

Likely an upside rally is still in the works but the rate needs to rebound hard to wash-out the shorts again. After yesterday's action I think both sides will take a break. Traders report stops in-range adding for two-way action. Long-term tech resistance now at 1.5000 area likely to cap near term but stops are building above and the 1.5000 handle is a big psychological number.

Volatility was the rule again today but USD action was not as pronounced as yesterday's whipsaw and the USD ended mixed against the majors to finish New York today. Most of the majors ended after testing important S/R areas and finishing the other side suggesting that the USD is continuing to top around current levels. Ending near the highs after a pullback during the day was GBP and EURO. GBP rallied to hold the 1.3800 handle after scoring highs at 1.3841 suggesting that the low-volume dip to the
1.3550 area overnight was a bear-trap.

The USD/JPY confirms the lack of FX investor excitement concerning the massive rally on Wall Street. The USD/JPY moved sideways showing indifference to a surging S&P. Even though Japan's Core Machinery Orders experienced a hefty decline, the number came in better than analyst expectations.

Therefore, investors are questioning whether the Japanese or U. S. economy is performing better right now. If Japanese data continues to beat expectations while U. S. disappoints, then we could witness a return to the negative correlation between the USD/JPY and S&P futures.

The Pound has depreciated against the Dollar over the past 24 hours despite the enormous rally in U. S. equities on Tuesday. The nationalization of Lloyd's bank is obviously not sitting well with investors. The BOE is treading water playing with nationalization and quantitative easing since the approach has proven unsuccessful in the past.

Hence, investors continue to punish the Cable. To make matters worse, Britain reported a Trade Balance below expectations, revealing that the economy continues to import far more than it exports. A negative Trade Balance is normally highly negative for the home currency.

The EUR/USD experienced wild swings yesterday despite an incredible rally in U. S. equities. Considering both have been positively correlated during significant movements, the EUR/USD's lackluster performance was a bit disconcerting.

However, the EUR/USD found support on our uptrend line once again, and is rallying strongly on Wednesday. Interestingly, the Euro is appreciating today despite extremely negative reports from the EU's economic powerhouse, Germany.

Gold dropped on Tuesday, exercising its negative correlation with U. S. equities to the full extent by dipping below the highly psychological $900/oz level.

However, the precious metal is finding support on our 1st tier trend line on Wednesday and has fought back to $900/oz. The question becomes whether U. S. equities can follow through on yesterday's impressive rally, or if Tuesday's surge was merely a head-fake.

If the S&P does continue upwards and Gold sinks below our 1st tier uptrend line, then we could witness a near-term crash in the precious metal. The next few trading sessions will certainly be telling as far as trend is concerned.