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The American dollar ended this Wednesday generally lower against its G-10 rivals

8th December 2016

EUR/USD

The American dollar ended this Wednesday generally lower against its G-10 rivals, with the Pound being an exception, as the British currency continued falling amid tepid local data.  The EUR/USD pair settled a few pips higher daily basis, around 1.0750, but remained confined to a tight 50 pips range all through the day. The data front was light, with Germany releasing its industrial production figures for October, up by.03%  in the month, below expectations of 0.8%. In the US, the number of job openings was little changed at 5.5 million on the last business day of October according to the official release, failing to spur dollar's demand.

The ECB will have its economic policy meeting this Thursday, which means that the pair could remain range bound  during the upcoming Asian session. The Central Bank is largely expected to extend its QE program beyond March 2015, but also to keep the amount of bonds' purchases and rates on  hold. Anything less than that could be read by the market that the ECB is preparing to tighten economic conditions, and will result in the EUR rallying sharply against its major rivals. 

Technical readings in the 4 hours chart show that the pair has lost its upward strength, as technical indicators have retreated from near oversold readings, but with the RSI  around 58, and the Momentum still above its 100 line, a bearish continuation is not yet confirmed. In the same chart the 20 SMA has continued advancing below the current level, and now stands a few pips above the 23.6% retracement of its latest bullish run, this last at 1.0690, and the level to break to see the pair resuming its slide. In the same chart, the immediate resistance comes around 1.0805, the 38.2% retracement of the same decline. Above this last, a stronger one comes at 1.0840/60, where the pair bottomed for most of 2015 and current 2016. 

Support levels: 1.0690 1.0650 1.0610

Resistance levels: 1.0740 1.0780 1.0810

USD/JPY

The USD/JPY pair extending its consolidative phase around the 114.00 level, unable to react to worldwide stocks, with European benchmarks establishing fresh yearly highs and Wall Street running to all-time records. Yields, however, fell this Wednesday, with the 10-year note benchmark at 2.35% from Tuesday's 2.39%, putting the pair up against the top.  The pair has drawn a potential double top around 114.80, but remains above the neckline of the figure, which stands at 112.86, December 4th low. The figure has a 200 pips' height, establishing a probable bearish target at 110.80 in the case of a bearish breakout. In the short term, the 1 hour chart shows that the price is trading between its 100 and 200 SMAs, bottoming around this last for the day at 113.41, while technical indicators have recovered from near oversold readings, but turned flat within negative territory. The 100 SMA in the mentioned time frame stands flat around 114.00, converging with the 23.6% retracement of the 2011/15 rally. In the 4 hours chart, the price is well above a bullish 100 SMA, the Momentum indicator heads modestly lower below its mid-line, and the RSI turned higher, now around 51, failing to provide clear clues on what's next for the pair. 

Support levels: 113.60 113.15 112.80 

Resistance levels: 114.20 114.55 114.90 

GBP/USD

The Sterling extended its decline against its American rival, falling down to 1.2569 amid poor UK macroeconomic figures that dented prospects of GDP growth in the final three months of the year. Early Europe, news showed that manufacturing output fell sharply in October, down by 0.9%, while Industrial production fell by 1.3%, the biggest fall in overall production in over three years. The NIESR GDP estimate, however, suggested that the UK grew by 0.4% in the three months to November, matching the previous three-month estimate. The pair recovered afterwards, but just enough to consolidate above the 1.2600 mark. From a technical point of view, the pair has found buyers around the 50% retracement of the 1.2387/1.2774 rally, triggered by news that the UK could avoid a "hard Brexit," but remains below the 38.2% retracement of the mentioned run at 1.2625, the immediate resistance, while the Momentum indicator keeps heading south within bearish territory, and the RSI indicator consolidates around 43, pointing to a downward extension, particularly on a break below the mentioned daily low.  

Support levels: 1.2570 1.2525 1.2470

Resistance levels: 1.2625 1.2660 1.2700

AUD/USD

Stocks saved the day for the Aussie, as the antipodean currency plunged at the beginning of the day on the back of poor growth figures. According to official data, the Australian economy shrank 0.5% in the three months to September, well below an already pessimistic forecast of 0.3%. The annual reading resulted at 1.8%, missing expectations of 2.5% and far below previous 3.3%. The AUD/USD pair fell down to 0.7416 with the news, but recovered in the US afternoon, ending the day not far from the high set at 0.7483. Technically, the daily chart shows that the pair has set two dojis in-a-row, with long lower shadows, which indicate that the market is still interested in buying the AUD. Shorter term, the 1 hour chart shows that the price is above a directionless 20 SMA, while technical indicators hold near overbought readings with no directional strength. In the 4 hours chart, the price has recovered above a modestly bullish 20 SMA, while technical indicators have lost upward strength within positive territory, limiting the upward scope, as long as the price remains below 0.7510, the immediate resistance. 

Support: levels: 0.7450 0.7410 0.7360 

Resistance levels: 0.7510 0.7550 0.7595

Dow Jones

Wall Street soared, with the Dow Jones Industrial Average advancing 297 points or 1.55%, to close the day at 19,549.62, an all-time high. The Nasdaq Composite added 60 points, to end at 5,393.76 while the S&P advanced 1.32%, to 2,241.35, this last also at record highs. The sharp rally was backed by optimism among European traders, as prospects that the Italian government will rescue the troubled lender Monte Dei Paschi, sent local shares to their highest for the year. Among the DJIA, Nike was the best performer, up by 3.01%, followed by Home Depot that added 2.85% and Visa that closed 2.78% higher. From a technical point of view, the daily chart shows that indicators turned sharply higher, with the RSI now at 81, whilst the benchmark accelerated above a sharply bullish 20 SMA. In the 4 hours chart, the RSI indicator lost upward strength, but holds around 80, while the Momentum indicator also lost upward strength after a modest advance above its 100 level. Overall, the risk is towards the upside, with further gains expected on an upward acceleration through 19,560, the immediate resistance. 

Support levels: 19,470 19,416 19,360    

Resistance levels: 19,560 19,600 19,650

FTSE 100

The FTSE 100 closed the day at 6,902.23, up by 122 points or 1.81% the largest one-day gain in over three months, as bank stocks rallied on news the Italian government will rescue  Monte Dei Paschi by taking a controlling stake. Also, a weaker dollar helped base metals to recover ground, underpinning the mining-related sector. In the UK, Lloyds Banking Group was the best performer, up by 6.90%, followed by Rio Tinto that added 5.48%. Also, Standard Chartered gained 4.22% while Anglo American surged by 0.72%. Optimism extended during the American session, with the benchmark heading into the Asian opening at 6,930. In the daily chart, the index has advanced above its 100 DMA for the first time since mid November, while technical indicators head north within positive territory, supporting some further gains for this Thursday. In the 4 hours chart, technical indicators have reached overbought conditions, turning modestly lower, but with no actual bearish strength. 

Support levels: 6,912 6,881 6,838 

Resistance levels: 6,953 6,998 7,044

DAX

The German DAX advanced 1.96% or 211 points, settling at 10,986.69, with European equities closing with strong gains as  the regional banking index hit an 11-month peak after Credit Suisse announced further cost cuts and Italian banks surged, on reports that the Italian government will prop up Monte Dei Paschi di Siena, a major, and troubled Italian lender bank. Among the DAX, ThyssenKrupp was the best performer, up by 6.75%, although banks entered into the top-10 list, with Commerzbank adding 3.00% and Deutsche Bank closing the day 2.96% higher. The strong upward momentum in US equities sent the benchmark up to current 11,080 region, the highest since December 2015. Technically, the daily chart shows that technical indicators maintain their sharp upward slopes within bullish territory, whilst the index run far above its moving averages, although at this point, the rally seems a bit overstretched this week. In the 4 hours chart, technical indicators have reached extreme overbought conditions, losing upward momentum, but still far from suggesting a downward move. 

Support levels: 11,036 10,965 10,910

Resistance levels: 11,090 11,148 11,200

Nikkei

The Nikkei 225 advanced 136 points or 0.74% to close at 18,496.69, tracking Wall Street's gains. Among the top performers was SoftBank that rose as much as 6.2% after Chief Executive Masayoshi Son said he would invest $50 billion in U.S. companies, but most financial and export-oriented equities closed sharply higher. Fresh record highs in US indexes has sent the benchmark up to current 18,635 region in after-hours trading, and is technically poised to continue advancing according to the daily chart that shows that indicators have turned back north, as 20 DMA extended its advance and is currently around 18,253. In the 4 hours chart, the index maintains a neutral-to-bullish stance, given that latest gains were not enough to push it beyond December 1st intraday high of 18,740. The benchmark has advanced up to 18,655 so far this Wednesday, now the level to surpass to confirm an upward continuation during the upcoming sessions. 

Support levels: 18,590 18,545 18,000

Resistance levels: 18,655 19,693 18,740

Gold

Spot gold held within its early week's range, ending the day with some modest gains at $1,174.19 a troy ounce, helped by a retracement in government bond yields. 10-year US Treasury bond yields retreat to 2.35%, the lowest rate in over a week, as investors turned to equities. Still, prospects of a US Federal Reserve rate hike next week, kept the upside limited for the safe-haven asset. In the daily chart, the price remains well below a bearish 20 SMA, while the RSI indicator is posting a modest correction from oversold readings, now around 31, and the Momentum consolidates within bearish territory, indicating that the risk remains towards the downside. In the 4 hours chart, technical indicators have lost upward strength after entering positive territory, while the price is holding a few cents above a horizontal 20 SMA, presenting a neutral stance in the short term. The weekly high was set at 1,187.97, the level to surpass to consider a more constructive outlook for gold. 

Support levels: 1,166.60 1,157.10 1,146.80    

Resistance levels: 1,175.95 1,188.00 1,197.20 

WTI Crude Oil

Crude oil prices kept retreating this Wednesday, despite the US EIA reported that stockpiles fell by 2.4 million barrels during the week ended Dec. 2,  much more than the 1 million-barrel draw analysts forecasted.  Weighing on the commodity were sharp increases in stocks at the Cushing, Oklahoma, delivery hub for US crude futures, up by 3.8 million barrels last week, the most since 2009, while gasoline stocks rose by 3.4 million barrels, almost doubling market's expectations. West Texas Intermediate crude oil futures fell below to $49.7 a barrel, settling a few cents higher by the end of the US session, down for a third consecutive day. Technically, the daily chart shows that technical indicators have turned sharply lower and are currently nearing their mid-lines, while the 20 DMA maintains a sharp upward scope now around 48.10. In the 4 hours chart, an early attempt to recover met selling interest around a now horizontal 20 SMA, while technical indicators head modestly lower within negative territory, supporting some further slides on a break below the mentioned daily low. 

Support levels: 49.70 49.10 48.60    

Resistance levels: 50.25 50.80 51.50

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.3% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.