Recent sharp declines in the US S&P 500 and other financial market risk barometers have pushed cross-market correlations sky-high through recent trade. All leveraged markets have been moving much in the same direction through recent episodes of financial market distress—emphasizing the level of interconnectedness across key markets. A glaring example is the record-correlation between the FX Carry Trade and Gold prices. These two seemingly unrelated markets are both highly leveraged and have seen impressive gains through recent months. With a sharp episode of financial market deleveraging, they likewise fell in unison against the resurgent US Dollar. It will be critical to monitor any and all turmoil in financial markets and its effects on the US Dollar.

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Forex options market volatility expectations have dropped noticeably through the past week’s trade, pointing to slower price moves in the week ahead. Yet recently-volatile financial markets emphasize that traders should always prepare for the unexpected, and the especially-volatile situation surrounding Greece and the broader Euro Zone could force substantial daily price swings. We will continue to favor our price-following Momentum and Breakout trading systems, as we believe they offer superior risk-reward compared to the Range trading signals. Though there is distinct risk of being chopped out in rangebound markets, potential gains outweigh potential risk with momentum-style trading.

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On the first page of DailyFX, you will find live currency quotes in the upper right hand corner like seen below.

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SP 500 Futures: The close above 1067 Friday opens confirms a near term bottom has been made at 1040.75 and it has potential for a move towards 1103 key resistance as long as 1056 support holds. Key support is now Friday#8217;s low (1040.75) and ……
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Equities: European equity bourses shrugged off negative closes in Asian markets and opened bid this morning, thanks to a number of encouraging flows in the premarket. But stocks have steadily t…
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After having identified your entry on a new trade, the next step should always be to identify the price level for your protective stop.

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The EUR/AUD, our favorite trending market, has not disappointed with new lows being printed almost on a daily basis.

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The Euro weakened against the greenback for the fourth successive day amid ongoing concerns regarding Greece’s budget deficit, leading the EUR/USD to hold the downward trending channel as the exchange rate looks to test the fresh yearly low of 1.3530.

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Japan’s GDP advanced the most since March 2008, while the Euro continues to come under selling pressure as traders await a bailout announcement for Greece.

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