The Pound appreciated against the Dollar after GfK Consumer Confidence came in above analyst expectations and British retailing giant Marks and Spencer reported an improvement in earnings.

The GBP/USD proceeded to experience considerable strength from our medium-term downtrend line, and is fighting towards our 2nd tier uptrend line as we type. The bounce in the Cable is encouraging considering it happened comfortably above our 1st tier uptrend line. However, the rally is fueled mostly by oversold conditions since we don't view the above-mentioned news as game-changing.

The EUR/USD has recovered well from Monday's lows despite a lower than expected CPI Flash Estimate. The large movement upwards is a bit confusing considering declining prices imply the ECB may need to get more aggressive with its monetary policy at Thursday's meeting.

Analysts are expecting the ECB to lower its benchmark rate to 1% and the use of quantitative easing is on the table. Monetary easing is normally negative for a currency, hence why the surge taking place this morning is a bit out of place.

Gold is bouncing up while exhibiting a positive correlation with the Euro and Pound. The precious metal managed to avoid a retest of $900/oz. and stabilized on our previous bottom-end of $908.66/oz. We're noticing a clear theme in terms of correlation. Gold is opting for a positive correlation with the EUR/USD, GBP/USD and U. S. equities.

Therefore, we encourage investors to analyze Gold's correlations before executing a trade on the precious metal. Gold's uptrend has been rescued once again with our last-resort 1st tier uptrend fading into the distance.

Crude bounced off our 1st tier uptrend line beautifully yesterday after a massive selloff in reaction to the possible bankruptcy of GM and Chrysler. As we stated in our previous post, the failure of the major U. S. auto manufacturers takes a large bite out of demand from several sides.

Higher unemployment implies a reduction in automobile purchases and consumption of crude. Additionally, we must consider the crude utilized to both manufacture and distribute the automobiles. With the S&P below 800 and global consumption and production levels coming into question again, there were sufficient reasons to send crude futures tumbling lower.

Rate fails at support and clears large stops under 1.3200; rate likely has stops building in both directions but shorts have taken control of the market as the rate gives back gains over the 1.3400 area last week late. Action remains two-way; stops under 1.3150 area said to be building in size but the rate recovers from low prints off the 100 day MA suggesting the move lower is likely supported on dips.

Rate falls through stops into support around the 1.4100 handle overnight; traders report more stops waiting under 1.4100 with bids around 1.4050 for the day. Rate recovers back to the 1.4200 handle late as late shorts fail to get a foothold. A close back under the 1.4250 area argues for more losses but support is solid around 1.4100 so aggressive traders can buy dips.