The USD/JPY continues its hard-fought battle with February highs and our 3rd tier downtrend line, but the currency pair seems to be losing the battle.  The rally is losing its momentum and may have one last shot at breaking through and retesting 100.

The fact investors lack conviction and commitment to a depreciating Yen reflects uncertainty concerning the state of the Japanese economy.  Japan’s Prelim Industrial Production data came in below analyst expectations with the highly-anticipated Tankan Manufacturing Index coming late Tuesday EST. 

The Cable has been in a rapid decline since falling through our 2nd tier uptrend as investors rush towards the Dollar for safety. The GBP/USD is finding near-term stability on our medium-term downtrend line in an effort to avoid retesting the key 1.40 level.

Investors panicked on Friday after Britain's Current Account plummeted and Final GDP came in a basis point below analyst expectations. The Current Account numbers were the largest cause for concern.

Not only did the Current Account come in near 1.8 Billion Pounds below expectations, but the announcement was coupled with a downward revision in last quarter's release. Despite the negative reaction from investors, QI09's release shows encouraging improvement from QIII08.

The EUR/USD has taken a turn for the worst in a hurry. The currency pair has returned almost all of its gains from the major rally in reaction to America's quantitative easing. Germany's Prelim CPI coming in lower than expected triggered Friday's selloff.

Furthermore, the ECB cautioned the economy may not be as stable as previously thought. Therefore, the use of quantitative easing and lower interest rates is back on the table. Hence, the EU could be wading in the same pool of massive liquidity as America, Britain and Japan.

Gold is contracting sharply after Friday's consolidation. The precious metal is exhibiting a negative correlation with the Dollar. The positive correlation with U. S. equities is a bit odd and raises a red flag.

These types of correlations remind us of late 2008 when commodities and equities joined together in large declines across the board, signaling deflation.

Therefore, such movements show investor confidence is withering and bulls should be wary. Gold's fundamental defenses are wearing thin, and all the precious metal has left is our 1st tier uptrend line and the highly psychological $900/oz level.

Crude futures are tanking, collapsing below our downtrend lines and our 2nd tier uptrend line. In fact, the futures are headed back towards the highly psychological $50/bbl level as the S&P futures plunge below 800.

The governmental rejection of GM and Chrysler is having a clear, profound effect on the price of Crude. The swift downward movement is understandable since the possible bankruptcy of America's major auto manufacturers attacks the demand side of the equation on several fronts.