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The EUR/USD pair closed the day around the 1.0600 level after plummeting to 1.0453

12th January 2017

EUR/USD

The EUR/USD pair closed the day around the 1.0600 level after plummeting to 1.0453, a fresh weekly low at the beginning of the US session. Markets were mostly quiet at the beginning of the day, as the absence of macroeconomic releases and a Donald Trump press conference scheduled for the American afternoon, kept investors side-lined.  Wild moved were seen all across the board after the presser, as there load of gossip and little of reality, given that Trump discussed hacking, Russia, and fake-news, but offered nothing on tax reforms of infrastructure investment.  Among other things,  Trump criticized the pharmaceutical industry, sending the sector sharply lower and resulting in stocks plunging, insisted that Mexico will end up paying the wall, and announced the creation of a  trust, administrated by his sons, who will take care of his business as he won't be able to do it.

The  pair rallied up to 1.0622 and establish above the 23.6% retracement of its latest bearish run, although the lower low daily basis, has somehow increased the risk of a new leg lower for the upcoming days, moreover as the pair has been steadily rejected from advances beyond the 1.0600 figure. In the 4 hours chart, the price has recovered above all of its moving averages that anyway have turned horizontal, a clear indication of the absence of directional strength, while the 20 and the 200 SMAs, stand quite close to the mentioned Fibonacci level. Technical indicators in the mentioned time frame have abruptly changed course an entered positive territory, but without enough to strength to confirm a steeper recovery. As commented on previous updates, only a firm advance beyond the 1.0650 level will open doors for additional gains, whilst below 1.0445, chances are of a retest of the multi-year low posted early January at 1.0340.

Support levels: 1.0565 1.0530 1.0490 

Resistance levels: 1.0620 1.0650 1.0710

USD/JPY

The USD/JPY pair plummeted to 114.23, its lowest since  early November, after the technical breakout of the 115.00 level, fueled by upcoming US President Donald Trump´s press conference. The JPY traded advanced up to 116.86 early US session, helped by the positive tone of stocks after the opening, but the dominant bearish momentum resumed after Trump´s words stirred up uncertainty. Adding to JPY's strength were positive news coming from the country overnight, as the November Coincident index surged to its highest in almost three years, printing 115.1 from previous 113.5, a sign of consumption improvement.  The pair bounced from the mentioned low, but is having a hard time around the 115.00 level ahead of the Asian opening, and looking increasingly bearish according to technical readings, as in the 4 hours chart, the price has broken below its 200 SMA for the first time in two months, while technical indicators head strongly lower  at fresh weekly lows, supporting a continued decline for the upcoming Asian session. 

Support levels: 114.60 114.20 113.70

Resistance levels: 116.10 116.60 117.00

GBP/USD

Trump saved the day for the GBP, as the UK currency fell down to 1.2037 before jumping as high as 1.2270, following his first contact with the press since July last year. The negative sentiment towards the Pound offset encouraging macroeconomic figures released at the beginning of the day, as during last November, Industrial Production was estimated to have increased by 2.1% compared with October 2016, while yearly basis, the increase was of 2.0%. Manufacturing Production increased by 1.3% in the same month,  and by 1.2% when compared to November 2015. The total trade balance, however, posted  a larger-than-expected deficit of £4.167B. The pair closed the day with gains above the 1.2200 figure, and in the 4 hours chart, technical readings favor additional advances, as the price is above a bearish 20 SMA whilst technical indicators bounced from oversold readings and maintain their strong bullish slopes within positive territory. Nevertheless, the negative sentiment towards the Pound may likely resume once the dust settles, with renewed declines below the 1.2200 figure denying chances of a firmer recovery. 

Support levels: 1.2200 1.2150 1.2110

Resistance levels: 1.2270 1.2310 1.3360

AUD/USD

The AUD/USD pair jumped to its highest since December 14th, reaching 0.7471 before settling with solid around 0.7450. The Aussie rallied ever since the day started, backed by a continued advance in base metals, and a comeback in oil prices amid dollar's broad weakness. The Australian macroeconomic calendar had little to offer this Wednesday, and will remain empty during the upcoming Asian session, which means that the pair will continue to take clues out of commodities. The current level stands for the 38.2% retracement of the 2016 rally, so it won't surprise to see some consolidation/retracement before the next directional move. In the 4 hours chart, technical indicators turned sharply higher, now entering overbought territory, while the price has jumped around 100 pips from a bullish 20 SMA. Also, the price has broken above the 61.8% retracement of the latest daily decline around 0.7390, and retracements towards this last will likely attract buying interest. An advance beyond the mentioned daily high will likely result in a test of the 0.7530 region, where the pair will complete a 100% retracement of its December losses. 

Support: levels: 0.7425 0.7390 0.7350  

Resistance levels: 0.7480 0.7530 0.7560 

Dow Jones

Wall Street shrugged off Trump-triggered losses and recovered in the last hours of trading, with US major indexes closing the day in positive territory. The Dow Jones Industrial Average ended up 98 points at 19,954.28, while the S&P added 0.28% to close at 2,275.32. The pharmaceutical sector underperformed after Trump said companies were “getting away with murder” with respect to drug prices, which weighed mostly in the Nasdaq Composite that anyway added 11 points, and settled at 5,563.65. The DJIA is back on track to test the 20,000 level, as in the daily chart, the index recovered above its 20 SMA, whilst technical indicators bounced modestly after the latest retracement, still lacking enough strength to confirm a bullish move for this Thursday. In the 4 hours chart, the index settled above is 20 and 100 SMAs that anyway remain flat and within a tight range, whilst technical indicators re-entered positive territory, but also with limited upward momentum. The daily high was set at 19,974, with an advance beyond it probably seeing the benchmark extending beyond the 20,000 threshold. 

Support levels: 19,913 19,869 19,806    

Resistance levels: 19,974 20,045 20,100

FTSE 100

The unstoppable rally of the FTSE 100 extended to a new all-time high as the Pound plunged, with the index adding 15 points, or 0.21% to end the day at 7,290.49. The index traded as high as 7,328 intraday, but investors are having second thoughts on the ongoing rally, triggered by a plummeting Pound due to Brexit fears. At some point, speculative interest will realize how unhealthy the run is, and the following decline could become a panic-selling movement. Anyway, the rally was once again backed by a run in base metals, with Anglo American leading the way higher, up by 11.30, followed by Rio Tinto that closed 6.80% higher and BHB Billiton that added 5.93%. Technical readings continue to support the upside, as indicators in the daily chart extended their advances, with the RSI currently at 79. In the 4 hours chart, a bullish 20 SMA continues driving the index higher, now acting as a strong dynamic support at 7,241, while the Momentum indicator holds directionless above its 100 level and the RSI aims higher within oversold territory after a modest downward move. 

Support levels: 7,241 7,178 7,146 

Resistance levels: 7,330 7,365 7,400

DAX

Major European indexes closed with gains, supported by a bounce in oil prices and with the German DAX ending the day up 0.54% at 11,646.17, its highest settlement for this year and a level last seen in August 2015. The absence of local macroeconomic data, however, limited the recovery. Banks and automakers recovered ground this Thursday, and among the DAX, E.ON was the best performer, up by 5.18%, but Volkswagen added 2.82% and Deutsche Bank 2.15%. Fresenius Medical Care led decliners, down by 0.82%, and given Trump's comments, the sector will likely fall this Thursday. The index maintains a bullish stance, currently trading in the upper end of its latest range and poised to extend its recovery given that in the daily chart, the index bounced sharply after approaching a bullish 20 DMA, whilst the RSI indicator resumed its advance within overbought readings and the Momentum advanced modestly after approaching its 100 level. In the 4 hours chart, the index stands above a horizontal 20 SMA, while technical indicators aimed modestly higher within positive territory, supporting some further gains on an advance beyond 11,694 the intraday high.

Support levels: 11,593 11,542 11,500

Resistance levels: 11,694 11,741 11,788

Nikkei

Japanese equities recovered some of the ground lost this week during the past Asian session, with the Nikkei 225 ending the day 63 points higher at 19,364.67. Trading, however, was cautious ahead of the much-anticipated Donald Trump's press conference. Most members closed up, with JFE Holdings being the best performer, up by 5.54%. The index eased from the mentioned high in after-hours trading amid Wall Street's decline, and given yen's strength, the risk has turned towards the downside for the upcoming session. In the daily chart, the index presents a neutral-to-bearish stance, holding a few points below a horizontal 20 SMA, the Momentum indicator stuck around its 100 level, and the RSI heading modestly lower around 54. Shorter term, the 4 hours chart shows that the index briefly surpassed its 20 and 100 SMAs before falling back below them, whilst technical indicators turned modestly higher within negative territory, still below previous highs, indicating limited buying interest. 

Support levels: 19,257 19,164 19,110

Resistance levels: 19,394 19,447 19,500

Gold

Gold prices edged higher this Thursday, after Donald Trump's press conference was closer to a media show than to a presidential statement.  Investors remained clueless over the upcoming tax reform or infrastructure investment once he was done, while negative comments towards the pharmaceutical industry triggered some risk aversion that ended up benefiting safe-haven gold. Spot rallied up to $1,198.21 a troy ounce, its highest since November 23rd, and closed the day with gains a few cents above 1,191.00. The ongoing correction from multi-month highs seems poised to extend according to the daily chart, as technical indicators keep advancing near overbought readings, while the 20 SMA has definitively turned north far below the current level. In the 4 hours chart, the price recovered quickly above a bullish 20 SMA, whilst technical indicators turned sharply higher after a modest downward move within positive territory, supporting the longer term perspective. The 38.2% retracement of the latest daily decline stands at 1,204.60, and an extension beyond it will confirm the bottom at 1,122, favoring further recoveries afterwards towards 1,280/1,300. 

Support levels: 1,188.90 1,179.50 1,173.10    

Resistance levels: 1,198.20 1,204.50 1,211.90

WTI Crude Oil

Crude oil prices edged higher after falling to 1-month lows on Wednesday, helped by news of further output cuts within the OPEC and a weaker dollar. US stockpiles report disappointed as the  American Petroleum Institute inventory data recorded a build of 1.5mn barrels in the latest week, slightly above the consensus forecast of a build around 0.9mn barrel, whilst the EIA report released this Thursday showed that US crude inventories increased by 4.1 million barrels last week. In another news, Saudi Arabia has cut February term crude supplies to refiners in India and Southeast Asia, seeking to comply with an OPEC deal. The commodity trimmed its previous day's losses, with WTI futures closing the day a few cents above $52.00 a barrel. Daily basis, the price is still below a bearish 20 SMA, currently around 53.10, whilst technical indicators turned modestly higher but remain within negative territory, maintaining oil at risk of another leg lower. In the 4 hours chart,  the daily gain was not enough to push the price above a bearish 20 SMA, while technical indicators have corrected oversold readings, but pared gains right below their mid-lines, in line with the longer term view. 

Support levels: 51.60 50.80 50.30    

Resistance levels: 53.10 53.80 54.55

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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.