Dollar's rally picked up this Tuesday

EUR/USD

Dollar's rally picked up this Tuesday, extending up to fresh multi-week highs against most of its rivals, with the clear exception of the Pound, which rallied on the back of BOE's Governor Carney comments. The common currency fell down to 1.1139 against the greenback and closed the day a handful of pips above it, with the pair poised to extend its decline. 

The German ZEW survey came in mixed, but for the most in line with what the market already knew that Germany is the backbone of the EU. May data showed that the current situation in the country is seen improving in May, up to 53.1 from 47.7,  but also that economic sentiment fell to 6.4 against the 12.0 expected, while for the EU, sentiment dropped to 16.8 from previous 21.5. Further supporting the greenback were US New home sales, up to their highest level in eight years in March, as sales surged by 16.6% to a 619,000 annualized pace.

The EUR/USD pair enters the Asian session with a strong bearish tone in its 4 hours chart, with the price far below a bearish 20 SMA, and the technical indicators still heading south, despite being in oversold levels. A daily ascendant trend line coming from December low of 1.0505 converges in the daily chart with the 200 DMA around 1.1080 a probable bearish target for this Wednesday, and the level to break to confirm a retest of the psychological 1.1000 figure. If somehow the common currency recovers ground, selling strong selling interest is expected to surge in the 1.1245/1.1280 region.  

Support levels: 1.1120 1.1080 1.1040

Resistance levels: 1.1160 1.1200 1.1245 

USD/JPY

The USD/JPY pair regained the 110.00 level,  consolidating around it by the end of the day, as US stocks edged sharply higher this Tuesday, with the pair being also helped by the absence of news coming from the Asian country. For once, BOJ's officers are not complaining over one-sided market moves, although worries may re-surge next Thursday, when Japan will release its National and Tokyo inflation data for May.  Expectations are of disappointing readings and if that is the case, the Central Bank will have no choice but to add more stimulus during its next meeting.  In the meantime, the short term picture is clearly bullish with the price now back above its 100 and 200 SMAs, and the technical indicators maintaining their bullish slopes, within overbought territory. In the 4 hours chart, the upward momentum is limited, as the pair needs to break decisively above the 110.60 region to be able to extend its rally up to 112.00 during the upcoming days. 

Support levels: 109.80 109.50 109.20 

Resistance levels: 110.20 110.60 111.00

GBP/USD

The  GBP/USD pair soared to its highest for the week, ending the day around 1.4638, and after spending  most of the last two sessions above the 1.4600 level. The UK currency benefited from BOE's Governor Carney comments, who said that the Central Bank will not fight post-Brexit referendum moves in GPB no matter the outcome, adding that they will take all necessary steps to ensure markets function in an orderly way in the case the "leave" side wins. The Sterling will probably keep trading on Brexit woes, with volatility probably increasing as the date of the referendum looms. In the meantime, the pair has reached a major resistance level, a daily descendant trend line coming from May high of 1.4769, and consolidates a few pips below it, today around 1.4635. The 4 hours chart presents a bullish tone, and supports a break through the trend line, as the Momentum indicator heads sharply higher well above its 100 level, whilst the RSI has lost upward strength, but keeps heading higher around 64. Further gains beyond 1.4663, last week high, should see the pair extending up to 1.4770 this Wednesday.

Support levels: 1.4570 1.4530 1.4480 

Resistance levels: 1.4630 1.4660 1.4700

AUD/USD

The AUD/USD pair fell to a fresh 2-month low of 0.7144, with the Aussie weighed by plummeting gold prices and comments from RBA Governor Glenn Stevens, who said that inflation is “really a bit too low” and hinted at further easing in the upcoming months. The pair bounced modestly as stocks surged, but remains well below 0.7210, the 61.8% retracement of this year's rally, with the dominant bearish trend firm in place. Short term, the 1 hour chart shows that a strongly bearish 20 SMA keeps capping the upside, now around 0.7180, whilst the technical indicators have corrected oversold readings before losing upward strength within negative territory. In the 4 hours chart, the 20 SMA has extended its decline to converge with the mentioned Fibonacci retracement, reinforcing the strength of the static resistance level, whilst the technical indicators have resumed their slides after correcting oversold readings, in line with further declines, particularly on a break below the mentioned daily low.  

Support levels: 0.7145 0.7100 0.7060

Resistance levels: 0.7210 0.7250 0.7290 

Dow Jones

Wall Street shrugged off recent rate hike concerns and edged sharply higher, with the DJIA soaring 213 points or 1.22% to close the day at 17,706.07. The Nasdaq advanced 95 points and closed at 4,861.06, while the S&P surged 1.37% to end at 2,076.06.  A deal between GoPro and Red Bull to collaborate on  content production and distribution fueled sentiment, with the first advancing 4.86%. As for the technical picture of the DJIA,  the daily chart shows that the index has surged above its 20 SMA for the first time in two weeks, whilst the technical indicators have turned modestly higher, but are still within neutral territory. In the 4 hours chart, the upside seems more constructive, given that the 20 SMA has accelerated its advance far below the current level, whilst the technical indicators have turned back higher near overbought levels, after a limited downward corrective movement. 

Support levels: 17,682 17,610 17,533 

Resistance levels: 17,760 17,848 17,915

FTSE 100

The FTSE 100 added 83 points to end the day at 6,219.29, surging to a fresh 3-week high on the back of stronger oil prices and improved market sentiment. The index is now at its highest for the month, having advanced modestly in futures trading. Beyond energy-related equities, the advance was also backed by strong gains within local banks, with shares of Royal Bank of Scotland Group up by 4.78% and Barclays surging 3.24%. The daily chart for the index shows that its currently trading above all of its moving averages, with the 20 and the 200 SMAs offering a strong dynamic support now around 6,170, while the technical indicators in the same time frame have entered positive territory, and keep heading higher. In the 4 hours chart, indicators are also heading north, near overbought levels, whilst the index is currently above its moving averages that anyway remain mostly horizontal, suggesting a limited upward momentum at the time being.  

Support levels: 6,085 6,044 6,006 

Resistance levels: 6,178 6,225 6,279

DAX

The German DAX up roared, advancing 219 points or 2.18% to close the day at 10,057.31, fueled by positive local data, as the Federal Statistical Office Destatis  reported that the price-adjusted GDP was up by 1.3% in Q1 of 2016, confirming solid growth in the largest European economy. Leading the way higher were auto makers, with Volkswagen closing 3.98% higher, Daimler adding 2.2% and BMW up by 1.86%. The index extended further in after-hours trading, and is currently trading around 10,100, and the daily chart shows that the technical indicators have crossed their mid-lines towards the upside, maintaining strong upward slopes. In the same chart, the 200 DMA stands at 10,131, providing an immediate resistance that if it's broken, should see a steeper recovery this Wednesday. In the shorter term, the 4 hours chart also presents a bullish stance that favors a continued advance, as the benchmark is currently trading above all of its moving averages, whilst the technical indicators keep heading higher near overbought levels. 

Support levels: 10,046 9,973 9,905

Resistance levels: 10,131 10,200 10,286

Nikkei

Most Asian equity markets edged lower this Tuesday, with the Nikkei 225 plummeting 154 points or 0.94%, to end the day at 16,498.76. The index fell on uncertainty over local fiscal policies, after Japanese Finance Minister Taro Aso said over the weekend that they will raise the sales tax as planned. This Tuesday, Aso also hit the wires, spurring concerns over stocks' traders as he said that there are no intentions to devaluate the yen sharply and consistently. The index, however, resumed its advance in electronic trading, fueled by fresh yen weakness and a rally in Wall Street, and is now poised to open the day at the upper end of its latest range, in the 16,770 region. Technically, the daily chart shows that the index is currently above a bearish 100 DMA,  while the technical indicators turned higher within positive territory, supporting some further gains ahead. In the 4 hours chart,  the index advanced above its moving averages that anyway remain mostly horizontal, whilst the technical indicators are also neutral, with no certain directional strength. Nevertheless, the upside is favored, with a break above 16,827 required to confirm a new leg higher for this Wednesday. 

Support levels: 16,712 16,619 16,527

Resistance levels: 16,827 16,902 16,993

Gold

Spot gold plunged to $1,228.14 a troy ounce, a fresh 1 month low, as speculation over a possible US rate hike next  June sent the dollar running higher after Monday's pause. Given that the FED has reiterated that an upcoming rate hike is data dependant, news that US New Home Sales surged by 16.6% in April, the biggest jump since 1992, fuelled demand for the American currency. Now trading a few cents above the mentioned low, the commodity has broken below a conjunction of trend lines that suggest that the bearish move is just starting. The commodity is now trading roughly $7.00 below the daily ascendant trend line coming from February 10th low, and the base of the daily descendant channel that contained price action ever since May started. Furthermore, the daily chart shows that the price is below its 100 DMA for the first time since late January, whilst the technical indicators have accelerated south within bearish territory. In the 4 hours chart, the 20 SMA extended its decline, but is now far above the current level, whilst the technical indicators are losing downward strength within oversold territory, but far from suggesting the downward move is exhausted. 

Support levels: 1,223.90 1,216.40 1,218.90

Resistance levels: 1,231.30 1,239.10 1,245.20 

WTI Crude Oil

Crude oil prices recovered towards it recent yearly highs, with WTI futures reaching $48.91 a barrel and ending the day a few cents below the level, fueled by speculation over a weekly drawdown in US oil stockpiles. The EIA report to be published this Wednesday, is expected to show a 2.5 million barrels drop in the week ending May 20th. Also helping the commodity to advance, were news coming from Iraq, where output fell by around 0.3 million barrels per day due to some power outages.  WTI consolidates at the higher end of its latest range, and the daily chart suggests that the commodity can extend it gains in the near term, as the price remains far above a bullish 20 SMA, whilst the RSI indicator turned back higher near overbought levels. In the shorter term, the 4 hours chart shows that the price is back above its 20 SMA after briefly falling below it on Monday, whilst the technical indicator present strong upward slopes within bullish territory. A break above 49.20 a strong static resistance level, should lead to a quick test of the 50.00 level,  where selling interest will likely contain gains, at least temporarily. 

Support levels: 47.35 46.70 46.20

Resistance levels: 48.10 48.60 49.20