Rate follows GBP in two-way action and holds gains but is not advancing as aggressively yet. Stops likely building above the 1.3740 area. Upside stops

likely cleared in size and if the rate can close above 1.3650 area more upside is likely.

Overhead resistance above 1.3350 area negated so a pullback to there would also be a strong buy. Traders note big names on the buy side on dips

overnight; semi-officials and model accounts buying above 1.3400.

Russians seen on the offer overnight in Europe. Bulls are likely in control of the market and any significant pullback is a buying opportunity in my view. Expect two-way action.

EUR/USD Daily

Resistance 3:  1.3980

The USD/JPY is recovering from its earlier losses and has climbed back above the psychological 95 level and our 1st tier downtrend line.

Furthermore, the currency pair is fighting above our near-term trend line showing investors are hesitating to capitulate. Despite the recent stability, the medium-term downtrend is back in control after the USD/JPY decided to head south out of the February trading range.

The quantitative easing actions of Japan and the U. S. are now competing against each other in terms of severity vs. GDP. Investors are showing the quant. easing of the U. S. overcomes that of Japan for the time being.

The Cable is consolidating along with the EUR/USD as investors cash in some profits after Wednesday's furious rally. Despite the slight pullback, the Cable is now comfortably above the downtrend line which we view as the last line of moving average resistance preventing the currency pair from continuing its uptrend.

Therefore, despite the immediate obstacles presented by February highs, Wednesday's move should mark the end of the downtrend for now. As we've seen in the past, large sudden movements are normally followed by successive aftershocks and a perpetuation of the movement's momentum.

However, keeping this in mind, the GBP/USD could still experience some near-term profit-taking and has dropped below our near-term trend line.

The EUR/USD consolidated late Thursday and is experiencing some profit taking on Friday after the massive run in reaction to America's announcement of quantitative easing.

We view the present downward movement in the EUR/USD as healthy profit-taking considering the large gains logged in the prior 48 hours. As we stated in our previous post, Wednesday's jump in the EUR/USD was a tectonic shift in trend and traders should keep this point in mind.

Gold is consolidating along with the major Dollar crosses as investors continue to decipher Wednesday's monumental rally. As we explained previously, Gold made a clear statement to the upside and Wednesday's move should carry over for the near-term.

Most interesting is whether gold will exhibit a positive correlation with U. S. equities. With gold in an uptrend and all equity correlations pointing to the upside, we will have to see whether equities can rally past the critical 800 level.

Crude is consolidating along with gold and all major Dollar crosses. In another sign of encouragement to the upside, crude futures are sticking above the highly psychological level during the consolidation process.

The futures are presently struggling with our 2nd tier downtrend line, the legitimate fundamental barrier before a retest of 2009 highs. Investors continue to ignore the rising crude inventories and are encouraged by the fact that a weaker Dollar should stimulate global demand for the Dollar-pegged commodity.

Furthermore, even though recent production and manufacturing data points from the U. S. have been negative, they indicate stabilization with a possible upturn.