The American dollar continued trading with a soft tone this Wednesday

EUR/USD

The American dollar continued  trading with a soft tone this Wednesday, although the EUR/USD pair fell to its lowest since last July, printing 1.0954 in the American afternoon, holding nearby by the end of the day. The day started with Chinese data, which showed that the country grew 6.7% in the third quarter, in line with market's expectations and the third consecutive similar reading. Also, retail sales in the country remained robust in  September, increasing 10.7% from a year ago, although industrial output in the same month, slowed modestly to 6.1% from previous 6.3% reading. The figures were not enough to excite investors' appetite,  having a null effect on the market. 

The common currency remains vulnerable ahead of the upcoming ECB's economic meeting this Thursday. Although the Central Bank is largely expected to maintain its economic policy unchanged, and focus once again in implementation, investors will be watching closely the Q&A session after Draghi's press conference, looking for clues on whether the latest rumors over tapering have sustainable bases, or if the ECB is willing to extend its easing program, sometime in the nearest future. There was a minor macroeconomic release in the EU this Wednesday, August construction output down by 0.9% in the month, and up 0.9% when compared to a year before, quite below July's readings. In the US, housing data came in mixed, with building permits surpassing  market's expectations by printing 1.225M in September, but housing starts missing forecasts with 1.047M. Nothing being enough to excite investors' appetite. 

The EUR/USD pair is at risk of extending its decline further from a technical point of view, having declined for a second day in a row, and with the 4 hours chart showing that the price remains unable to regain ground above a bearish 20 SMA. In the same time frame, the RSI indicator hovers near oversold readings, while the Momentum lacks directional strength below its 100 level, reflecting also, the lack of interest around the pair ahead of the upcoming key events. Below 1.0950, July's low and the immediate support, the pair has scope to extend its decline to 1.0910, while below this last, the decline will likely accelerate towards the 1.0860 region.

Support levels: 1.0950 1.0910 1.0860    

Resistance levels: 1.1020 1.1055 1.1100

USD/JPY

The USD/JPY pair fell down to 103.15, its lowest in almost a week, with no clear catalyst behind the move, but some profit taking ahead of key macroeconomic events and the fact that the pair has been unable to rally beyond the 104.00 figure. The pair is at risk of falling further, although for now, the downside remains contained as the pair remains above its 100 DMA, currently at 102.60. Shorter term, the 1 hour chart shows that the price accelerated its decline after breaking below a daily ascendant trend line coming from October 10th daily low, while now developing well below its 100 and 200 SMAs. In the mentioned time frame, technical indicators have turned lower after a limited upward correction from oversold readings, in line with further slides. In the 4 hours chart, technical indicators have turned flat well below their mid-lines, as the market seems to have entered wait-and-see mode, whilst the 100 SMA maintains a strong upward slope below the current level, currently around 102.95, the immediate support. 

Support levels: 102.95 102.60 102.30

Resistance levels: 103.75 104.10 104.40 

GBP/USD

The GBP/USD pair closed marginally lower around 1.2260 after rallying up to 1.2332, the highest in a week, reached after the release of UK employment data. According to official figures, the number of people in work rose by 106,000 in the three months to August, well below the latest readings, although the unemployment rate remains steady at 4.9%. Wages came in line with markets' expectations, with a modest uptick in earning excluding bonus to 2.3%. While the data seemed positive, and the job´s sector is expected to keep growing during the upcoming months, the divergence between the modest advance in salaries and the strong one in inflation, may become a worrisome issue in the longer term. From a technical point of view, the pair retreated from a strong static resistance level, as in the 4 hours chart, is clear that the price retreated from the 1.2320/30 region multiple times over these last few days. In the same chart, technical indicators are pulling back from near overbought levels, but remain within positive territory, whilst the price is developing above a modestly bullish 20 SMA, which for now, limits the downside around 1.2230. A break below this last, however, will likely result in the pair falling back towards the lower end of the 1.21 region. 

Support levels: 1.2230 1.2180 1.2130 

Resistance levels: 1.2290 1.2330 1.2375 

AUD/USD

The AUD/USD pair rallied through the critical 0.7700 in the US afternoon, fueled by a sharp  recovery in commodities, with oil up roughly 2.5%  after the release of US inventories data, and spot gold trading at its highest in two weeks. The pair traded as high as 0.7729, level last seen early September, holding nearby ahead of the Australian monthly jobs report. Employment Change fell in August, down by 3.9K, below market's expectations of 15.2K. The market is now expecting 15.2 new jobs to be added in September, whilst the unemployment  rate is expected to tick higher, to 5.7% from previous 5.6%. Should the data beat expectations, the pair may well rally up to the 0.7770 region a strong static resistance, while beyond this last, the market will be eyeing 0.7834, this year high. From a technical point of view, the short term picture is bullish, as in the 1 hour chart, technical indicators have resumed their advance near overbought readings and after a short-lived downward correction, while the 20 SMA accelerated its advance, now around 0.7680, an immediate support. In the 4 hours chart, technical indicators keep heading higher within overbought readings, whilst the price has moved well above a bullish 20 SMA, all of which supports a bullish extension. 

Support levels: 0.7680 0.7640 0.7600 

Resistance levels: 0.7730 0.7770 0.7810

Dow Jones

US stocks closed with gains, fueled by rising crude oil prices, with the Dow Jones Industrial Average ending the day at 18,202.62, up by 40 points. The Nasdaq Composite added 2 points, to close at 5,246.41, while the S&P gained 4 points, to 2,144.29. The banking sector also gained, boosted by better-than-expected earnings reports from Morgan Stanley and Halliburton. Despite the intraday gains, the Dow Jones remains within last week range, and the daily chart shows that the upward potential remains contained, as remains capped by a now modestly bearish 20 DMA, while also holding below the 100 DMA, and with technical indicators still heading barely higher within negative territory. In the 4 hours chart, the rally was contained by a bearish 200 SMA, while the index is stuck around a horizontal 100 SMA. In this last time frame, technical indicators have turned south within positive territory, also maintaining the upside limited.  

Support levels: 18,152 18,095 18,040

Resistance levels: 18,213 18,264 18,310

FTSE 100

The FTSE 100 reversed its early losses and closed the day at 7,021.92, up by 0.31% or 21 points, helped by comments from chancellor Philip Hammond, suggested firms would not be restricted from recruiting foreign highly skilled workers post-Brexit as they would be exempt from the Government's planned immigration controls. Also, a sharp advance in oil prices following the US inventories report, helped commodity-related equities. Among the best performers were Anglo American, up by 2.43%, while Randgold Resources surged by 2.16%.   As for the technical outlook of the FTSE, the modest advance helped daily indicators bouncing from their mid-lines, while the benchmark held above a bullish 20 SMA after testing it for third consecutive day. Still, there's a clear absence of upward momentum. In the 4 hours chart, the index presents a neutral stance, with technical indicators heading nowhere around their mid-lines, and the 20 SMA also flat, a few points below the current level. 

Support levels: 7,010 6,962 6,934

Resistance levels: 7,051 7,129  7,160

DAX

Most European equities closed the day lower, although the German DAX managed to close the day at 10,64568, up by 14 points. Caution prevailed among local investors, ahead of the ECB's meeting this Thursday. Deutsche Lufthansa led the advance, closing the day 5.65% up after raising its full-year earnings forecast, backtracking partially on a profit warning issued three months ago, while banks also gained, with Commerzbank up 1.11% and Deutsche Bank adding 0.97%. The index advanced within range, and despite bullish, technical readings lack upward strength, as in the daily chart, indicators are barely holding within positive territory. Nevertheless, the index remains above a bullish 20 SMA. In the 4 hours chart, the index holds above its moving averages that anyway remain directionless, while the momentum indicator retreated towards its mid-line within positive territory, and the RSI lost upward strength, now consolidating around 58. 

Support levels: 10,607 10,549 10,484

Resistance levels: 10,692 10,750 10,805

Nikkei

The Japanese Nikkei managed to advance 35 points, or 0.21% this Wednesday, to close at 16.998.90, up for a fourth consecutive day. The index took clues from Wall Street, also helped by so far good earnings reports. Mitsubishi Motors was the best performer, up 7.85% after the Nikkei newspaper reported that Nissan Motor Co has decided to appoint its CEO, Carlos Ghosn, as chairman of Mitsubishi Motors. The index retreated modestly from the mentioned close, but holds nearby ahead of the Asian opening, and it is having a hard time settling above the 17,000 figure, probably due to the uncertainty about what's next for worldwide economies, a situation that replicates in most major indexes. Technically, the positive tone seen on previous updates persists, with the index holding above its moving averages and indicators in positive territory, although with limited upward momentum. In the shorter term, the 4 hours chart presents a neutral-to-positive tone, as the benchmark is holding above a now flat 20 SMA, while indicators also lack directional strength, but remain above their mid-lines. 

Support levels: 16,902 16,842 16,777

Resistance levels: 17,007 17,062 17,108 

Gold

Spot gold surged to a fresh 2-week high of 1,273.27, retreating partially ahead of the close but ending the day anyway above the critical 1,266.30 Fibonacci level, now the immediate support. The bright metal was boosted by a generally weaker dollar, also helped by Chinese data that although not shocking, resulted at least positive. Up for a third consecutive day, the commodity may continue recovering during the upcoming sessions, although in the longer run, the risk is towards the downside, as chances of a December US rate hike remain high, roughly at 65%. From a technical point of view, the daily chart shows that technical indicators are heading higher from oversold readings, but are still within negative territory, while the 20 SMA has extended its slide above the current level, now around 1,277.00, the immediate resistance. In the 4 hours chart, technical indicators have turned flat near overbought levels, while the 20 SMA gain a modest upward slope below the current level, not enough to confirm an upward extension. 

Support levels: 1,266.30 1,256.25 1,245.30 

Resistance levels: 1,277.05 1,283.90 1,295.30

WTI Crude Oil

Crude oil  prices soared after the release of US inventories data, as the EIA reported that US commercial crude inventories fell by 5.2 million barrels to a total of 468.7 million barrels in the week through Oct. 14, against market's expectations of a crude build of 2.7 million barrels. West Texas Intermediate crude oil settled around $51.60 a barrel after trading as high as 52.21, its highest since last July. Still, a surprisingly large build of 2.5 million barrels in gasoline stocks against expectations for a 1.3 million-barrel drop, cooled market's enthusiasm. Technically, the daily chart for WTI supports some further advances, given that the RSI indicator heads sharply higher around 66, while the 20 SMA moved higher alongside with the price, now around 49.45. In the same chart, the Momentum indicator lacks directional strength, but holds within positive territory. Shorter term, and according to the 4 hours chart, the RSI pulled partially back from overbought levels, but the momentum remains healthy, heading north above its 100 level, while the 20 SMA also aims higher below the current level, in line with additional gains. 

Support levels: 51.00 50.20 49.45 

Resistance levels: 52.20 52.85 53.60