Markets Higher Ahead of Next European FinMin Meeting; Nikkei 225 Pressuring Major Resistance at 10,205

Equity futures in Europe are following the Euro currency higher as sentiment rises prior to regional finance ministers meeting held later today.  The meeting agenda will focus on the vote to increase the level of available bailout funds and so far the positive sentiment seen in markets has been generated by various comments from government officials suggesting that the vote will have no trouble passing with a majority.  Oil prices pushed higher for the first time this week and metals followed suit as investors entered into new long positions at lower levels.

Euro Stoxx 50 futures are higher by 0.8 percent prior to the London open, with the S&P 500 looking more unchanged, up o.3 percent.  The MSCI Asia Pacific Index showed a similar gain, up 0.2 percent as the index continues to build on its largest quarterly bull run since September of 2010.  Oil prices were higher by 0.6 percent on the session, recovering some of its 3.2 percent decline for the week.

In Asian, the Japanese Yen rose after data showed that core consumer prices (CPI) were higher during the month of February and the nation’s jobless rate dropped during the same period.  Shortly after, figures out of Australia indicated that New Home Sales improved in February, helping to underpin rate expectations in the Reserve Bank of Australia (RBA).

Looking forward, the main story will come with the result of the European finance ministers meeting, which is being held in Copenhagen and will be conducted over a two-day period.  The main proposal is for a one-year provision to raise the ceiling in available bailout funds for indebted member nations, bringing the limit to 940 billion Euros.  Macro data will come with the German Retail Sales figures and University of Michigan Consumer Confidence survey, which are both expected to improve from the previous month.

Technical Analysis:


The AUD/USD is continuing to look like a top has formed with prices now caught in a descending channel on the shorter term time frames.  Longer term, the main resistance area to watch is the double top now seen at 1.0850 as this is expected to contain prices in the coming months.  More immediately, the next major support levels below are seen with the 50% and 61.8% Fibonacci retracements of the rally from 0.9670, and a break here will confirm the top at 1.0850.  Selling rallies is now the preferred strategy, with 1.0550 providing a strong area of resistance on the hourlies.

The Nikkei 225 is coming into some very significant resistance areas on the long term time frames (weeklies), with prices now pressuring both historical and trend line resistance levels at 10,205.  Given the strong upside rally we have seen no far this year, the main preference is to sell strength until some sort of retracement is seen but this position should be taken with some level of caution, given the MACD readings, which are now coming into positive territory on the same weekly charts.  A weekly close above trend line resistance would suggest a strong bull rally in the longer term.