Why Meat Prices Are Going To Continue Soaring For The Foreseeable Future

by Michael Snyder

The average price of USDA choice-grade beef has soared to $5.28 a pound, and the average price of a pound of bacon has skyrocketed to $5.46.  Unfortunately for those that like to eat meat, this is just the beginning of the price increases.  Due to an absolutely crippling drought that won’t let go of the western half of the country, the total size of the U.S. cattle herd has shrunk for seven years in a row, and it is now the smallest that is has been since 1951.  But back in 1951, we had less than half the number of mouths to feed.  And a devastating pig virus that has never been seen in the United States before has already killed up to 6 million pigs in this country and continues to spread like wildfire.  What all of this means is that the supply of meat is going to be tight for the foreseeable future even as demand for meat continues to go up.  This is going to result in much higher prices, and so food is going to put a much larger dent in American family budgets in the months and years to come. One year ago, the average price of USDA choice-grade beef was $4.91.  Now it is up to $5.28, and the Los Angeles Times says that we should not expect prices to come down “any time soon”… Come grilling season, expect your sirloin steak to come with a hearty side of sticker shock. Beef prices have reached all-time highs in the U.S. and aren’t expected to come down any time soon. Extreme weather has thinned the nation’s beef cattle herds to levels last seen in 1951, when there were about half as many mouths to feed in America. “We’ve seen strong prices before but nothing this extreme,” said Dennis Smith, a commodities broker for Archer Financial Services in Chicago. “This is really new territory.“ The outlook for pork is even worse.  The price of bacon is 13 percent higher than it was a year ago, and porcine epidemic diarrhea is absolutely devastating the U.S. pig population… A virus never before seen in the U.S. has killed millions of baby pigs in less than a year, and with little known about how it spreads or how to stop it, it’s threatening pork production and pushing up prices by 10 percent or more. Scientists think porcine epidemic diarrhea, which does not infect humans or other animals, came from China, but they don’t know how it got into the country or spread to 27 states since last May. It is estimated that up to 6 million pigs may have died already, and it is being projected that U.S. pork production could be down by 7 percent this year.  That would be the largest decline in more than 30 years. But even if someone brought an end to this pig virus tomorrow, we would still be facing a very serious food crisis in this nation. The reason for this is the multi-year drought which is crippling farming and ranching in much of the western half of the country. As you can see from the latest U.S. Drought Monitor update, the drought shows no signs of letting up… Hopefully this drought will end soon. But I wouldn’t count on it. In fact, CBS News recently interviewed one scientist that says that the state of California could potentially be facing “a century-long megadrought“… Scientist Lynn Ingram, author of “The West without Water: What Past Floods, Droughts, and Other Climatic Clues Tell Us about Tomorrow,” uses sediment cores inside tubes to study the history of drought in the West. “We’ve taken this record back about 3,000 years,” Ingram says. That record shows California is in one of its driest periods since 1580. While a three-to-five-year drought is often thought of as being a long drought, Ingram says history shows they can be much longer. “If we go back several thousand years, we’ve seen that droughts can last over a decade, and in some cases, they can last over a century,” she says. So what will we do if this drought just keeps going and going and going? As the article quoted above noted, last century was far wetter than usual.  During that time, we built teeming cities in the desert and we farmed vast areas that are usually bone dry… Scientists say their research shows the 20th century was one of the wettest centuries in the past 1,300 years. During that time, we built massive dams and rerouted rivers. We used abundant water to build major cities and create a $45 billion agriculture industry in a place that used to be a desert. So what happens if the western half of the country returns to “normal”? What will we do then? Meanwhile, drought is devastating many other very important agricultural areas around the world as well.  For example, the horrible drought in Brazil could soon send the price of coffee through the roof… Coffee futures prices are up more than 75 percent this year due to a lack of appreciable rain in the coffee growing region of eastern Brazil during January and February, which are critical months for plant development, according to the International Coffee Organization, a London-based trade group. At this point, 142 Brazilian cities are rationing water, and it wouldn’t just be coffee that would be affected by this drought.  As a recent RT article explained, Brazil is one of the leading exporters in a number of key agricultural categories… Over 140 Brazilian cities have been pushed to ration water during the worst drought on record, according to a survey conducted by the country’s leading newspaper. Some neighborhoods only receive water once every three days. Water is being rationed to nearly 6 million people living in a total of 142 cities across 11 states in Brazil, the world’s leading exporter of soybeans, coffee, orange juice, sugar and beef. Water supply companies told the Folha de S. Paulo newspaper that the country’s reservoirs, rivers and streams are the driest they have been in 20 years. A record heat wave could raise energy prices and damage crops. Some neighborhoods in the city of Itu in Sao Paulo state (which accounts for one-quarter of Brazil’s population and one-third of its GDP), only receive water once every three days, for a total of 13 hours. Most people just assume that we will always have massive quantities of cheap, affordable food in our supermarkets. But just because that has been the case for as long as most of us can remember, that does not mean that it will always be true. Times are changing, and food prices are already starting to move upward aggressively. Yes, let us hope for the best, but let us also prepare for the worst.

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World War Or The End Of The Dollar

by Paul Craig Roberts

Is the US or the World Coming to an End? It will be one or the other 2014 is shaping up as a year of reckoning for the United States. Two pressures are building on the US dollar. One pressure comes from the Federal Reserve’s declining ability to rig the price of gold as Western gold supplies shrivel and market knowledge of the Fed’s illegal price rigging spreads. The evidence of massive amounts of naked shorts being dumped into the paper gold futures market at times of day when trading is thin is unequivocal. It has become obvious that the price of gold is being rigged in the futures market in order to protect the dollar’s value from QE. The other pressure arises from the Obama regime’s foolish threats of sanctions on Russia. Other countries are no longer willing to tolerate Washington’s abuse of the world dollar standard. Washington uses the dollar-based international payments system to inflict damage on the economies of countries that resist Washington’s political hegemony. Russia and China have had enough. As I have reported and as Peter Koenig reports here http://www.informationclearinghouse.info/article38165.htm Russia and China are disconnecting their international trade from the dollar. Henceforth, Russia will conduct its trade, including the sale of oil and natural gas to Europe, in rubles and in the currencies of its BRICS partners. This means a big drop in the demand for US dollars and a corresponding drop in the dollar’s exchange value. As John Williams (shadowstats.com) has made clear, the US economy has not recovered from the downturn in 2008 and has weakened further. The vast majority of the US population is hard pressed from the lack of income growth for years. As the US is now an import-dependent economy, a drop in the dollar’s value will raise US prices and push living standards lower. All evidence points to US economic failure in 2014, and that is the conclusion of John Williams’ April 9 report. This year could also see the breakup of NATO and even the EU. Washington’s reckless coup in Ukraine and threat of sanctions against Russia have pushed its NATO puppet states onto dangerous ground. Washington misjudged the reaction in Ukraine to its overthrow of the elected democratic government and imposition of a stooge government. Crimea quickly departed Ukraine and rejoined Russia. Other former Russian territories in Ukraine might soon follow. Protesters in Lugansk, Donetsk, and Kharkov are demanding their own referendums. Protesters have declared the Donetsk People’s Republic and Kharkov People’s Republic. Washington’s stooge government in Kiev has threatened to put the protests down with violence. http://rt.com/news/eastern-ukraine-violence-threats-405/ Washington claims that the protests are organized by Russia, but no one believes Washington, not even its Ukrainian stooges. Russian news reports have identified US mercenaries among the Kiev force that has been sent to put down the separatists in eastern Ukraine. A member of the right-wing, neo-Nazi Fatherland Party in the Kiev parliament has called for shooting the protesters dead. Violence against the protesters is likely to bring in the Russian Army and result in the return to Russia of its former territories in Eastern Ukraine that were attached to Ukraine by the Soviet Communist Party. With Washington out on a limb issuing threats hand over fist, Washington is pushing Europe into two highly undesirable confrontations. Europeans do not want a war with Russia over Washington’s coup in Kiev, and Europeans understand that any real sanctions on Russia, if observed, would do far more damage to Europeans. Within the EU, growing economic inequality among the countries, high unemployment, and stringent economic austerity imposed on poorer members have produced enormous strains. Europeans are in no mood to bear the brunt of a Washington-orchestrated conflict with Russia. While Washington presents Europe with war and sacrifice, Russia and China offer trade and friendship. Washington will do its best to keep European politicians bought-and-paid-for and in line with Washington’s policies, but the downside for Europe of going along with Washington is now much larger. Across many fronts, Washington is emerging in the world’s eye as duplicitous, untrustworthy, and totally corrupt. A Securities and Exchange Commission prosecuting attorney, James Kidney used the occasion of his retirement to reveal that higher ups had squelched his prosecutions of Goldman Sachs and other “banks too big to fail,” because his SEC bosses were not focused on justice but “on getting high-paying jobs after their government service” by protecting the banks from prosecution for their illegal actions. http://www.counterpunch.org/2014/04/09/65578/ The US Agency for International Development has been caught trying to use social media to overthrow the government of Cuba. http://rt.com/news/cuba-usaid-senate-zunzuneo-241/ This audacious recklessness comes on top of Washington’s overthrow of the Ukrainian government, the NSA spying scandal, Seymour Hersh’s investigative report that the Sarin gas attack in Syria was a false flag event arranged by NATO member Turkey in order to justify a US military attack on Syria, Washington’s forcing down Bolivian President Evo Morales’ presidential plane to be searched, Saddam Hussein’s “weapons of mass destruction,” the misuse of the Libyan no-fly resolution for military attack, and on and on. Essentially, Washington has so badly damaged other countries’ confidence in the judgment and integrity of the US government that the world has lost its belief in US leadership. Washington is reduced to threats and bribes and increasingly presents as a bully. The self-inflicted hammer blows to Washington’s credibility have taken a toll. The most serious blow of all is the dawning realization everywhere that Washington’s crackpot conspiracy theory of 9/11 is false. Large numbers of independent experts as well as more than one hundred first responders have contradicted every aspect of Washington’s absurd conspiracy theory. No aware person believes that a few Saudi Arabians, who could not fly airplanes, operating without help from any intelligence agency, outwitted the entire National Security State, not only all 16 US intelligence agencies but also all intelligence agencies of NATO and Israel as well. Nothing worked on 9/11. Airport security failed four times in one hour, more failures in one hour than have occurred during the other 116,232 hours of the 21st century combined. For the first time in history the US Air Force could not get interceptor fighters off the ground and into the sky. For the first time in history Air Traffic Control lost airliners for up to one hour and did not report it. For the first time in history low temperature, short-lived, fires on a few floors caused massive steel structures to weaken and collapse. For the first time in history 3 skyscrapers fell at essentially free fall acceleration without the benefit of controlled demolition removing resistance from below. Two-thirds of Americans fell for this crackpot story. The left-wing fell for it, because they saw the story as the oppressed striking back at America’s evil empire. The right-wing fell for the story, because they saw it as the demonized Muslims striking out at American goodness. President George W. Bush expressed the right-wing view very well: “They hate us for our freedom and democracy.” But no one else believed it, least of all the Italians. Italians had been informed some years previously about government false flag events when their President revealed the truth about secret Operation Gladio. Operation Gladio was an operation run by the CIA and Italian intelligence during the second half of the 20th century to set off bombs that would kill European women and children in order to blame communists and, thereby, erode support for European communist parties. Italians were among the first to make video presentations challenging Washington’s crackpot story of 9/11. The ultimate of this challenge is the 1 hour and 45 minute film, “Zero.” You can watch it here: http://www.youtube.com/watch?v=QU961SGps8g&feature=youtu.be Zero was produced as a film investigating 9/ll by the Italian company Telemaco. Many prominent people appear in the film along with independent experts. Together, they disprove every assertion made by the US government regarding its explanation of 9/11. The film was shown to the European parliament. It is impossible for anyone who watches this film to believe one word of the official explanation of 9/11. The conclusion is increasingly difficult to avoid that elements of the US government blew up three New York skyscrapers in order to destroy Iraq, Afghanistan, Libya, Somalia, Syria, Iran, and Hezbollah and to launch the US on the neoconservatives agenda of US world hegemony. China and Russia protested but accepted Libya’s destruction even though it was to their own detriment. But Iran became a red line. Washington was blocked, so Washington decided to cause major problems for Russia in Ukraine in order to distract Russia from Washington’s agenda elsewhere. China has been uncertain about the trade-offs between its trade surpluses with the US and Washington’s growing encirclement of China with naval and air bases. China has come to the conclusion that China has the same enemy as Russia has–Washington. One of two things is likely: Either the US dollar will be abandoned and collapse in value, thus ending Washington’s superpower status and Washington’s threat to world peace, or Washington will lead its puppets into military conflict with Russia and China. The outcome of such a war would be far more devastating than the collapse of the US dollar.

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Losing Interest

by Barry Eichengreen

BERKELEY – Two of the world’s most prominent economic institutions, the International Monetary Fund and Former US Treasury Secretary Larry Summers, recently warned that the global economy may be facing an extended period of low interest rates. Why is that a bad thing, and what can be done about it? Adjusted for inflation, interest rates have been falling for three decades, and their current low level encourages investors, searching for yield, to take on additional risk. Low rates also leave central banks little room for loosening monetary policy in a slowdown, because nominal interest cannot fall below zero. And they are symptomatic of an economy that is out of sorts. Identifying the problem, much less prescribing solutions, requires diagnosing underlying causes. And here, unfortunately, economists do not agree. Some point to an increase in global saving, attributable mainly to high-saving emerging markets. Readers will detect here echoes of the “savings glut” argument popularized nearly a decade ago by the likes of former US Federal Reserve Board Chairmen Alan Greenspan and Ben Bernanke. There is only one problem: the data show little evidence of a savings glut. Since 1980, global savings have fluctuated between 22% and 24% of world GDP, with little tendency to trend up or down. Even if global saving slightly exceeds 24% of world GDP in 2014, it is unlikely to remain that high for long. China’s saving will come down as its GDP growth slows, the authorities decontrol interest rates on bank deposit, and the economy rebalances toward consumption. That will be true of other emerging markets as well, as their growth rates similarly fall from the exceptional peaks scaled at the end of the last decade. The same empirical objection applies to arguments that blame low interest rates on the increasing concentration of income and wealth. It is plausible that the wealthy consume smaller shares of their income, and recent trends in income and wealth distribution certainly are troubling on many grounds. But to affect global interest rates, these trends have to translate into increased global savings. And the evidence is not there. A second explanation for low interest rates is a dearth of attractive investment projects. But this does not appear to be the diagnosis of stock markets, notably in the United States, where equities are trading at record-high prices. And it sits uneasily with the enthusiasm with which venture capitalists are investing in firms commercializing new technologies. Some economists, led by Northwestern’s Robert Gordon, argue that, stock market valuations notwithstanding, all the great inventions have been made. The commercial potential of the Internet, the human genome project, and robotics pales in comparison with that of the spinning jenny, the steam engine, and indoor plumbing. Maybe so, but it is worth observing that technology skeptics have been consistently wrong for 200 years. History suggests that, while we may not know what the high-return inventions of the future will be, we can be confident that there will be some. Still others, like the Fed’s current leader, Janet Yellen, suggest that investment and interest rates are depressed as a result of the damage done to the economy and the labor force during the Great Recession. Specifically, the skills and morale of the long-term unemployed have been eroded. Detached from the labor market, they lack incomes to spend; and, stigmatized by long-term unemployment, they are not regarded as attractive employees. As a result, firms see inadequate demand for their products, and a shortage of qualified workers to staff their assembly lines. The result is low capital spending, one of the striking anomalies of the current recovery, which in turn can explain other troubling aspects of the recovery, from slow growth to low interest rates. This argument has considerable merit. But, though it can explain why capital spending has been weak and interest rates have been low for the last three years, it cannot account for why capital expenditure has been insufficient to prevent rates from trending down for more than three decades. Here, the only explanation still standing is the shift in the composition of activity away from capital-intensive forms of production, like manufacturing, to less capital-intensive activities, like services. If the disorder has multiple causes, then there should be multiple treatments. There should be tax incentives for firms to hire the long-term unemployed; more public spending on infrastructure, education, and research to compensate for the shortfall in private capital spending; and still higher capital requirements for banks and strengthened regulation of nonbank financial institutions to prevent them from excessive risk-taking. Finally, central banks should set a higher inflation target, which would give them more room to cut nominal interest rates in response to a future slowdown. This is not something that a new Fed chair, anxious to establish her anti-inflation bona fides, can say out loud. But that is what her arguments imply.

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Argentine wheat exports to double as sowings rise

by Agrimoney.com

Argentina's wheat exports will double next season, as elevated prices encourage farmers to return to the grain, but volumes will remain low by historical levels, muting the country's return as world shipper. Argentina will export 6.0m tonnes of wheat in 2014-15, starting in December - well above the 39-year low of 3.0m tonnes expected for this season, the US Department of Agriculture's Buenos Aires bureau said. "Some doubt" that even that even 3.0m tonnes will be reached this season, the bureau said. However, even 6.0m tonnes represents a relatively small volume compared with those that Argentina has historically shipped, to earn itself a seat on the top table of world wheat exporters. Shipments approached 13m tonnes in 2011-12, and averaged 9.4m tonnes of the decade to that season, before farmers cut sharply their wheat plantings, blaming government export curbs. Argentina has been a particularly important origin of wheat export supplies for neighbouring Brazil - a structural importer, which has turned increasingly to the US to fill its needs – but has also offered supplies competitive enough to trade into African destinations, such as Egypt. 'Extremely high prices' The revival in the popularity of wheat reflects the "extremely high prices" seen in Argentina after farmers last season cut sowings drastically, saying that export restrictions, aimed at ensuring adequate domestic supplies, were denying them the chance to benefit from higher global values. The price rises proved particularly acute after the government in 2012-13 overestimated the size of the domestic wheat crop, permitting extra exports, and meaning that domestic mills had to pay up for supplies in a rally which peaked late last year. The United Nations Food and Agriculture Organization, estimating Buenos Aires wholesale flour prices at $570 a tonne, said that while values "continue to decline from their record highs of late 2013", they are still "almost 70% higher than a year earlier, underpinned by the limited recovery of the 2013 wheat production and low levels of stocks". Political concessions? There is talk that the government is, ironically, attempting to encourage wheat sowing in part by easing up on export curbs. The bureau said that "contacts thing that export taxes, currently at 23%, could be waived" to promote wheat sowing, with farmers offered inexpensive credit too, although growers remain sceptical. "If some of these measures are announced, planted area could increase even further, but not significantly as most producers would prefer to wait and see after many years of disbelief and uncertainty," the bureau said in a report. Farmers have long had a difficult relationship with the government, for which Argentina's hefty crop exports represent an invaluable source of foreign currency for the cash-strapped country. Wheat vs barley A big incentive to plant wheat is the disappointing results for many farmers of growing barley instead. "Barley area grew significantly in the past few seasons primarily as an alternative for farmers to run away from planting wheat which was and continues to be closely controlled by the government, making the price for the farmer lower than it should be," the bureau said. However, "in the past two crop seasons many barley producers were disappointed with the quality and yields obtained", with the price also declining, opening up a discount of $25-35 a tonne to wheat, compared with historic parity. The bureau forecast Argentina's barley area falling 24% to 950,000 hectares, on a harvested basis, dragging production down one-third to 3.3m tonnes, the lowest in four years.

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China’s Fractures Widens: Property Trust Sales Crash By 49%

by David Stockman

China is the site of the greatest credit bubble and consequent construction boom in recorded history.  Property prices have risen so persistently and so steeply for so long that hundreds of millions of Chinese believe they only go up, and that high rise luxury condos, which they buy and never intend to live in, are the best possible form of savings account. No wonder there are an estimated 70 million empty apartment units—most of which are priced at 25-50X the average household income. Given such massive malinvesments and deformations, the mantra of Wall Street bulls that China’s vast and desperately poor rural population will eventually migrate to the cities and fill the empty towers was always non-sense. But now this fallacy is becoming blindly evident as the tottering credit pyramids which underlie China’s construction boom are beginning to rapidly falter. For years, the building boom was funded by China’s big state banks, but when Beijing tried to cool the red hot expansion of credit to developers several years ago, the big banks took a lesson from Citibank.  They just opened up off-balance sheet “trust” operations which sold short-term notes–often with double digit interest rates—-to tens of millions of newly flush Chinese speculators, and used the proceeds to make loans to developers at even higher yields. So the property lending spree just migrated over to what became an immense shadow banking system virtually overnight. Now estimated variously at $3-4 trillion it hardly even existed in 2008. Needless to say, this kept the game going a bit longer. It did allow local officialdom which sold municipal land to the developers to meet their revenue targets and also their quotas for local “GDP growth”. All of these targets and quotas came down the chain of command form Beijing, and highlight why China is the opposite of an economic miracle. It is actually a pernicious brew of command-and-control economic statism, mindless expansion of fiat credit and a tissue of corruption, delusions and lies that tenuously and temporarily bind together what is actually a dangerously unstable system. Among the legions of vulnerabilities underlying China’s great game of speculation and mass mania, is the naïve belief of millions of newly minted red speculators that property values can be propped up indefinitely and that the fat yields on their trust certificates are money good. But the recent collapse of property developer Zhejiang Xingrun Real Estate Co. underscored the immense default risk pyramided into the system—that is, in many cases newly minted trust loans were simply recycled back into repayment of balance sheet loans from the parent bank. Historically, it has always been a truism that when loans to payoff loans to payoff more loans reach an asymptote, even all-powerful state rulers can’t prevent an eventual collapse. A current Bloomberg story highlights the danger. Even before a serious retail “run” on the trust operations has gotten started, these shadow banking agencies have already begun to drastically curtail the new advances that property developers desperately need to keep building game going, while also keeping existing property prices at nosebleed valuations: Chinese developers raised 49 percent less through trusts in the first quarter as the collapse of Zhejiang Xingrun Real Estate Co. highlighted default risks….Issuance of property-related trusts, which target wealthy investors, slid to 50.7 billion yuan ($8.16 billion) from 99.7 billion yuan in the fourth quarter… The relevant point here is not just the depth and speed of the adjustment, but that on the margin the flow of fresh credit from the shadow banking system has been the decisive factor propping up China’s property sector in the last 2-3 years. Already Chinese interest rates are beginning to rise reflecting the growing, if belated recognition of default risk by investors, while nation wide property sales  have also begun to weaken: The value of homes in China sold in January and February fell 5 percent to 598.5 billion yuan from the same two months a year earlier, the statistics bureau said last month. It does not take much imagination or familiarity with the history of financial bubbles and manias to see where this is going. As credit-deprived developers are forced to disgorge the massive flow of newly constructed units in their pipelines at a discount in order to generate urgently needed cash, the price of existing units will also buckle. This, in turn, will cause widespread revulsion among the newly minted red speculators who will be shocked to learn that prices do not grow to the sky, even in China.  These newly chastened red speculators are likely to bring enormous pressure on the government to prop up the luxury apartment market, but also to sharply curtail placing any more ”savings” deposits into apartment units. In turn, property developers will be squeezed even more, the sky-line of cranes will steadily go quiet, and the credit fueled GDP growth of China will head south. As the Bloomberg article makes clear, even the sell-side market strategists are now recognizing that the jig may be up: “The banking system and the shadow banking system are becoming concerned about exposure,” David Cui, China strategist at Bank of America said in an interview yesterday. “Once people refuse to provide credit to developers, their balance sheets will be under pressure, forcing them to cut prices. Once enough of them cut prices, fewer people would buy because most people buy property only when they think the price is going up. If this persists, it will turn into a vicious loop.”

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British Pound GBP/USD - Double Top or Further Rally?

By: Nadia_Simmons

Earlier today, the greenback moved higher against the British pound after better-than-expected jobless claims data, which showed that the number of people filing for initial jobless benefits in the week ending April 4 declined to an almost seven year low. Will this drop in British currency trigger a bigger correction? What is the technical picture of cable? We invite you to read our today's Forex Trading Alert. In our opinion, the following forex trading positions are justified - summary: EUR/USD: none GBP/USD: short (stop-loss order: 1.6855) USD/JPY: none USD/CAD: none USD/CHF: none AUD/USD: none EUR/USD Looking at weekly chart, we see that EUR/USD bouced off the lower border of the rising trend channel (marked with brown) and came back above the long-term declining resistance line - at least for now. As a reminder, invalidation of the breakdown is a strong bullish signal that suggests further improvement. Despite these positive circumstances, the common currency remains below the 2014 high and the rising resistance line (marked with red), which succesfully stopped growth in the previous month. However, if we take a look at the Euro Index - which is based on slightly different prices, we get a very different picture. We have discussed this chart in today's Gold & Silver Trading Alert: The situation is clearer today, as the 2013 highs have been surpassed. Now it seems likely that the rally will be stopped by the declining long-term resistance line, just like it was the case about a month ago. We will be looking for confirmations along the way, but at this time our best guess is that the Euro Index will rally to the 139 level or close to it (a move to the March high is not out of the question) (...). What does the above mean? That the breakout from the first chart is not confirmed and the breakout above the long-term resistance line is not really significant just yet. Moreover, even if we focus on the first chart alone, we have to note that the previous "breakout" was seen in March and it was followed by its quick invalidation and visible declins. We could very well be seeing a similar pattern shortly. Are there any important short-term resistance levels which could stop buyers before reaching the annual high? Let's take a look at the daily chart. In our last Forex Trading Alert, we wrote the following: (...) taking into account the current position of the indicators (buy signals remain in place), it seems that we may see further improvement in the coming day (or days). If this is the case, the next upside target for the buyers will be the upper line of the declining trend channel (currently around 1.3843). As you see on the above chart, the buyers not only pushed EUR/USD above the this resistance line, but also above the resistance level based on the March 24 high and the 70.7% Fibonacci retracement. From this perspective, we see that the exchange rate reached the resistance zone created by the 76.4% and 78.6% Fibonacci retracements (around 1.3896-1.3900). If it is broken, we may see further improvement and an increase to the previously-broken green resistance line, which currently almost intersects the 2014 high. However, if this resistance area encourages sellers to act, we may see a pullback in the coming days and the first downside target will be the upper line of the declining trend channel (which serves as support at the moment). Since there were only daily rallies in the past 4 days, it seems that a correction here is more likely. This correction can - and likely will - translate into a reversal on the long-term chart and quite possibly lead to greater declines. Very short-term outlook: mixed Short-term outlook: bearish MT outlook: bearish LT outlook: bearish Trading position: In our opinion no positions are justified from the risk/reward perspective. We are not opening short positions just yet, because of the divergence on the long-term charts, however we will quite likely open it once we see some kind of confirmation. GBP/USD On the daily chart, we see that the situation has improved significantly as GBP/USD broke above the resistance zone created by the 76.4% and 78.6% Fibonacci retracements (based on the recent entire decline). This positive event triggered further improvement and the exchange rate reached the 2014 high earlier today. If this strong resistance level holds, we will likely see a bearish double top pattern. In this case, the initial downside target will be the medium-term rising green line (currently around 1.6676). If it is broken, we may see a drop to the lower border of the orange rising trend channel (around 1.6550), which corresponds to the April low. Nevertheless, if the buyers do not give up and push the pair above the 2014 high, we may see an increase to the upper line of the trend channel (around 1.6962) or even to the 2009 high (around 1.7040). Please note that the current position of the indicators suggests that correction is just around the corner (the RSI declined from the level of 70, while the CCI and Stochastic Oscillator are overbought). Very short-term outlook: mixed Short-term outlook: bearish MT outlook: bearish LT outlook: mixed Trading position (short-term): In our opinion short positions (full) are justified from the risk/reward perspective at the moment with stop-loss order at 1.6855. Please note that if GBP/USD breaks above the 2014 high (and stop-loss order works), we'll consider opening short positions around the 2009 high. USD/JPY On the daily chart, we see that USD/JPY extended losses and (very temporarily - at least at the moment when these word are written) broke below the lower green support line. Therefore, what we wrote in our previous Forex Trading Alert is still up-to-date. (...) if this support is broken, we will likely see a drop to the March 14 low or even to the February low. Please note that sell signals remain in place, supporting sellers. Very short-term outlook: bearish Short-term outlook: mixed with bearish bias MT outlook: bullish LT outlook: bearish Trading position (short-term; our opinion): In our opinion no positions are justified from the risk/reward perspective at the moment. USD/CAD Quoting our last Forex Trading Alert: (...) the exchange rate reached its first downside target - the Feb.19 low (1.0909). (...) if it is broken, the next target for the sellers will be the horizontal red support line created by the May 2010 high (around 1,0850). As you see on the above chart, the sellers realized their bearish scenario as USD/CAD declined to the red support line yesterday. If this strong support holds and encourages buyers to act, we may see a corrective upswing to the previously-broken green support line (around 1.1009). Please note that this scenario is reinforced by the current position of the indicators (the RSI bounced off the level of 30, while the CCI and Stochastic Oscillator are close to generating buy signals). Very short-term outlook: mixed with bullish bias Short-term outlook: mixed MT outlook: bullish LT outlook: bearish Trading position (short-term; our opinion): In our opinion no positions are justified from the risk/reward perspective at the moment. USD/CHF On Tuesday, we wrote the following: (...) USD/CHF also extended declines and reached the first downside target - the 50% Fibonacci retracement (based on the recent increase). (...) if it is broken, we will likely see a drop to the next Fibonacci retracement (around 0.8794) or even to the lower line of the blue rising trend channel (currently around 0.8781). Please note that the current position of the indicators still favors sellers. From today's point of view, we see that the sellers not only realized this scenario, but also pushed the exchange rate below the lower border of the blue rising trend channel, which is a bearish signal that suggests further deterioration. In this case, the nearest support is the declining brown line (which is also the upper line of the declining trend channel). Taking into account the current position of the indicators (the RSI approached the level of 30, while the CCI and Stochastic Oscillator are oversold), it seems that this line may pause declines in the near future). However, if it is broken, we will see a test of the strength of the March low. Very short-term outlook: bearish Short-term outlook: bearish MT outlook: bearish LT outlook: bearish Trading position (short-term; our opinion): In our opinion no positions are justified from the risk/reward perspective at the moment. AUD/USD Quoting our last Forex Trading Alert: (...) we may see an increase to the next upside target (after a breakout above the upper line of the rising trend channel) around 0.9407. However, we should keep in mind that the RSI and CCI are overbought, which may trigger a pullback in the coming day (or days). As you see on the daily chart, the buyers not only realized this scenario, but also pushed AUD/USD to the resistance zone created by the 70.7% Fibonacci retracement (based on the entire Oct.-Jan. decline). Taking this fact into account, we should consider two scenarios. On one hand, if this resistance area holds, we may see a pullback in the coming days. In this case, the downside target for the sellers will be the previously-broken upper line of the trend channel. However, if the resistance zone is broken, we will likely see an increase to around 0.9510, where the price target for the reverse head and shoulders pattern is (we wrote about this formation in our Forex Trading Alert posted on March 26). Looking at the current position of the indicators, we see that they are overbought, which suggests that correction is just around the corner. Very short-term outlook: bullish Short-term outlook: bullish MT outlook: bearish LT outlook: bearish Trading position (short-term; our opinion): In our opinion no positions are justified from the risk/reward perspective at the moment.

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