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The American dollar fell against all of its major rivals

24th February 2017

EUR/USD

The American dollar fell against all of its major rivals, although the common currency underperformed, with the EUR/USD ending the day around 1.0570, pretty much unchanged daily basis, after peaking at 1.0594. Movements were not related to macroeconomic data, but to political woes, as the greenback plunged on comments from US Treasury Steven Mnuchin, who expressed his concerns about  the high levels of US debt, while adding that new policies would have a limited impact on the economy during this 2017. Those betting for a "phenomenal" tax reform in the upcoming days also got disappointed, as the government seems focused on mid-class´ tax cuts rather than in corporate ones, whilst Mnuchin "hopes" that the tax reform will pass the Congress by August, also cooling down expectations for significant growth during the next few months. 

The EUR/USD technical picture shows that the upside potential is well limited, as the intraday recovery stalled short from a daily descendant trend line coming from February 12th high at 1.0828, around 1.0600 for this Friday. In the 4 hours chart, the price stands slightly above a bearish 20 SMA, whilst the Momentum indicator has lost upward strength above its 100 level, whilst the RSI indicator has turned lower, now neutral around 48, all of which suggests that there's not enough buying interest, despite dollar's weakness. 

Support levels: 1.0520 1.0470 1.0440

Resistance levels: 1.0590 1.0635 1.0660

USD/JPY

The USD/JPY pair fell to 112.54, its lowest in two weeks, amid US  Treasury Secretary Steven Mnuchin´s comments about issuing ultra-long Treasury bonds, with low interest rates that should remain low for a long period of time. The 10-year benchmark fell from previous 2.42% to 2.38%, while the 30-year note yield retreated to 3.02% from 3.04%. Despite stocks maintained their positive tone, with the DJIA advancing to all-time highs and positive data coming from the US, the pair continues trading accordingly to the yield-curve. Holding a few pips above the mentioned low, the pair is at risk of falling further according to technical readings, as in the 4 hours chart, the price has clearly broken below a modestly bearish 100 SMA, whilst technical indicators have lost their bearish strength near oversold territory, with no signs of changing course at the time being. The pair is closing the day a few pips below a still bullish 100 DMA, breaking below the indicator for the first time since early November, although a better confirmation of a steeper decline will come with a break below 111.95, the 38.2% retracement of the latest bullish run.  

Support levels: 112.90 112.50 112.10

Resistance levels: 113.70 114.20 114.60 

GBP/USD

The GBP/USD pair rallied to a fresh two-week high of 1.2560, to close the day some 20 pips below the level, as the dollar took a double whammy from US policy makers, as Treasury Secretary Mnuchin toned down expectations of an economic boom this year, while FED's Lockhart defined "fairly soon" as within the next three meetings as the probable date for the next rate hike.  Minor data coming from the UJ was again encouraging, as CBI Distributive Trades survey for February showed that sales volumes are expected to rise again in the year to March, albeit at a slightly slower pace. Most retailed said that sales volumes rose in February, resulting in the index coming in at 9% from previous -8%. There are no major events scheduled in the UK for this Friday. Technically, the pair is at the higher end of the last three-week range,  having broke above the 23.6% retracement of its latest bullish run at 1.2535, and having found short term buying interest around it after the initial advance. Still, and given that the movement was driven by dollar's weakness and not because of Pound's strength, further gains well depend on how the market reacts to US headlines. From a technical point of view, the price is well above its 20 SMA that is slowly gaining upward strength around 1.2460, whilst technical indicators have lost upward strength, and currently consolidate around their mid-lines. An advance beyond 1.2580, the immediate resistance, should favor additional gains up to 1.2705, this year high. 

Support levels:  1.2430 1.2380 1.2345 

Resistance levels: 1.2480 1.2530 1.2565

AUD/USD

The AUD/USD pair extended its rally up to 0.7740  this Thursday, as broad dollar's weakness offset negative macroeconomic figures coming from Australia earlier in the day. The official report of Private Capital Expenditure (PCE) for the fourth quarter of 2016 showed a fall of 2.1% compared with the previous quarter, well below the 1.0% decline expected. During the upcoming Asian session, RBA Governor Lowe is due to testify before the House or Representatives Standing Committee on Economics, with investors looking for clues on upcoming monetary policy moves. The pair settled above 0.7700, but it's still struggling to extend gains beyond the critical level. In the 4 hours chart, technical indicators have turned lower within positive territory, but the 20 SMA maintains a strong bullish slope around 0.7685, suggesting that, if downward corrective movements remain contained above this last, the pair could advance further this Wednesday. An upward acceleration beyond 0.7770, should result in the price approaching 2016 high of 0.7834, where investors will like rush to take profits out of the table. 

Support levels: 0.7685 0.7640 0.7600 

Resistance levels: 0.7735 0.7770 0.7815

Dow Jones

US stocks closed again mixed, with the Dow Jones Industrial Average posting its 10th consecutive record high, ending at 20,810.32, up by 34 points. The S&P advanced 1 point and closed at 2,363.81, but the Nasdaq Composite lost 25 points or 0.43%, to 5,835.51, weighed by a sharp decline in Tesla after reporting weak earnings for the last quarter of 2016. Within the DJIA, Johnson & Johnson was the best performer, up 1.82%, while Caterpillar topped losers' list, down 2.70%. In the daily chart the index keeps posting higher highs and higher lows daily basis, whist technical indicators head north within extreme overbought territory, maintaining the bullish potential intact. In the 4 hour chart, the index bounced once again from a bullish 20 SMA, currently providing support around 20,731, while the RSI indicator holds within overbought territory, and the Momentum turned modestly lower within positive territory, hardly supporting a downward move at this point. 

Support levels: 20,789 20,730 20,692 

Resistance levels: 20,839 20,860 20,900

FTSE 100

The FTSE 100 lost 30 points of 0.42% to settle at 7,271.37, trimming the modest gains posted on Wednesday.  It was quite a busy day in London, with several earnings reports released and multiple companies going ex-dividend. Glencore closed 1.72% higher, after reporting an 18% increase in 2016 profits, whilst Intu Properties topped gainers' list, adding 6.75% after announcing that its full-year underlying earnings rose 7% for 2016 to £200m, primarily due to a 3.6% growth in like-for-like net rental income. Centrica was the worst performer, down 3.68%,  after reporting a 4% rise in 2016 operating profit, but maintained dividends flat, disappointing investors. The index remains within a tight consolidative range for a second consecutive week, and the daily chart shows that it holds above a modestly bullish 20 SMA, whilst technical indicators keep retreating within positive territory, suggesting the index may extend its decline further on a break below 7,253 February 17th low. In the 4 hours chart, the index broke below a horizontal 20 SMA, whilst technical indicators head lower within negative territory, also in line with further slides. 

Support levels: 7,296 7,253 7,212 

Resistance levels: 7,319 7,354 7,390 

DAX

European equities closed lower, with the German DAX settling at 11,947.83, down by 50 points or 0.42%, with banks and automakers among the worst performers. Financials in Asia and Europe were affected by FED's Minutes released late Wednesday, as the Central Bank remained unclear on when it will pull the trigger on a rate hike, with policymakers affected by fiscal uncertainty. Commerzbank shed 0.46% while Deutsche Bank closed 0.02% higher. Infineon Technologies was the best performer, up 0.88%. The DAX daily chart shows that index holds well above a bullish 20 SMA, currently at 11,735, while the RSI indicator retreats modestly from overbought readings, and the Momentum also eases within positive territory, overall reflecting the latest retracement rather than suggesting downward exhaustion. In the 4 hours chart, the 20 SMA maintains a strong bullish slope well below the current level, whilst technical indicators retreated from extreme overbought conditions, but are losing downward strength within positive territory, in line with the longer term outlook. 

Support levels: 11,924 11,873 11,822

Resistance levels: 11,985 12,031 12,079 

Nikkei

The Nikkei 225 closed 8 points lower at 19,371.50, as a decline in US yields weighed on financial-related equities. The movement was a consequence of US FOMC Minutes, which failed to provide clear clues on what's next for rate hike, amid persistent uncertainty. Within the Nikkei, Yamato Holdings was the best performer, up 7.89%, while Toshiba topped losers' list, down 4.44%, followed by Toho Zinc which lost 2.68%. The index fell further in after-hours trading, tracking the poor performance of US and European equities, and stands around 19,290 ahead of Friday's opening. From a technical point of view, the daily chart shows that the index bounced modestly on a test of its 20 DMA, still flat around 19,221, whilst technical indicators have turned south, but hold within positive territory, suggesting  that a break below the mentioned SMA may result in additional declines. In the 4 hours chart, the index is now below a still bullish 20 SMA, but technical indicators have entered bearish territory, and maintain their bearish slopes, also indicating the possibility of further slides ahead.

Support levels: 19,306 19,248 19,175

Resistance levels: 19,407 19,463 19,510

Gold

Spot gold accelerated its advance and printed a fresh 2017 high of $1,251.01 a troy ounce this Thursday, as the dollar eased against all of its major rivals, following comments from US Treasury Secretary Mnuchin that trigger some uncertainty over upcoming fiscal policies in the US. Adding to the positive tone was physical demand in India, amid the marriage season demand. From a technical point of view, the daily chart shows that the Momentum indicator bounced from its 100 level, whilst the RSI indicator heads north near overbought territory, all of which supports additional gains for this Friday, particularly on a break above 1.255.15, the 61,8% retracement of the post-US election decline. In the same chart, a bullish 20 SMA converges with the 50% retracement of the same decline around 1,230.00. Shorter term, technical readings in the 4 hours chart also lean the scale towards the upside, as the price moved well above now bullish moving averages, whilst technical indicators decelerated their upward momentum, but hold near overbought readings. 

Support levels: 1,242.50 1,230.00 1,219.30

Resistance levels: 1,255.15 1,261.60 1.273.20

WTI Crude Oil

Crude oil prices surged this Thursday, after the EIA weekly report showed a minor-than-expected build. US crude stocks rose 564,000 barrels last week, against 3.475M expected, but it´s still  the seventh consecutive rise. In Cushing, Oklahoma, inventories fell by more than 1.5 million barrels, its largest draw since October. Despite the good news and broad dollar's weakness, WTI was unable to extend its gains beyond the 55.00 level, and settled at $54.39 a barrel. The daily  chart presents a moderate bullish stance, as the price holds above its 20 SMA, whilst technical indicators turned higher within positive territory, with limited upward strength. In the 4 hours chart, the price is holding above a now bullish 20 SMA, but technical indicators keep lacking directional strength around their mid-lines, suggesting that the price will likely remain within its usual 50/55 range during the upcoming sessions. 

Support levels: 54.10 53.40 53.00 

Resistance levels: 54.75 55.30 56.00

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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.