SPX is challenging its 4.3-year trendline at 2055.00 in the Premarket this morning. Should it break through, we may see Intermediate-term support at 2033.81 being challenged next.

ZeroHedge reports, “Two days after stocks slid in a coordinated risk-off session, and one day after a DOE estimate of US oil inventories sent US stocks surging while the failed Allergan-Pfizer deal unleashed torrential hopes of a biotech M&A spree leading to the single best day for the sector in 5 years, sentiment has again shifted, this time due to a violent surge in the Yen as the market keeps testing the resolve of the Japanese central bank to keep its currency weak, and so far finding it to be nonexistent.

As a result, as we reported previously, the USDJPY plunged nearly 200 pips overnight, undoing all its gains since the expansion of Japan's QQE on October 31 2014, and while equities did their best to ignore this move for as long as possible, ultimately they too succumbed.”

USD (DXY in futures) made a new low at 94.02, challenging its cycle Bottom and edging nearer to its minimum target at 93.93. The window for a bounce opens today and remains open until Monday. It appears that there may be one more probe lower in USD before the bounce.

Reuters reports, “The dollar's fall against the yen deepened on Thursday after minutes of the U.S. Federal Reserve's most recent policy meeting offered little optimism over the state of global growth and the prospect of a rise in interest rates in June.

The U.S. currency .DXY, hammered since late March by the latest retreat in expectations for any further rises in U.S. rates, fell 1 percent to less than 109 yen, its weakest in 17 months.”

USD/JPY declined to a low of 108.04, caused by the unwinding of the currency pair used as a liquidity source for new speculations. That suggests at least this source of liquidity may be disappearing as the pair trade is unwound.

TNX appears to have resumed its decline. Confirmation comes at the breakdown beneath the prior low at 17.17.

Regards,

Tony

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