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The EUR/USD pair closed marginally higher on Monday

10th January 2017

EUR/USD

The EUR/USD pair closed marginally higher on Monday, unable however, to confirm a break of the 1.0565 level, the 23.6% retracement of its latest daily slide. The macroeconomic calendar was light, with only some minor releases both shores of the Atlantic to drive the market. Some risk aversion dominated the scene, putting the dollar under selling pressure. In the data German´s Industrial Production increased by 0.4% monthly basis last November, against expectations of a 0.7% gain, while October reading suffered a modest revision up to 0.5%. The annual reading came in at 2.2%, also missing market's forecast. 

The Trade Balance in the country for the same month was more encouraging, as the seasonally adjusted trade surplus  widened to €21.7B, better than the €20.8B expected, with monthly imports up by 3.5% and exports by 3.9%. In the US, the FED´s Labor Market Conditions Index declined by 0.3 in December, against a previous gain of 1.5, usually seen as a sign of slowing in the sector, yet after the release of Friday's Payrolls, the news was far from a shock. Additionally, US policymakers reiterated their hawkish rhetoric, with Rosengren foreseeing more regular hikes. 

The  pair is trying to bottom ever since the year started, and while there are no signs that the rally may continue, particularly amid self EUR weakness, those looking for parity seem to have taken a step to the sidelines. From a technical point of view, the 4 hours chart shows that the price is now standing above all of its moving averages, with the 20 SMA crossing above the 200 SMA after already surpassing the 100 one, usually a sign of a bullish continuation. Yet, in the same chart, the Momentum has turned south whilst the RSI indicator lacks enough strength and consolidates at 57. Also, failure to hold gains above 1.0600 during the past two weeks, suggests that a rally beyond 1.0650 is required to confirm the bullish extension. 

Support levels: 1.0530 1.0490 1.0445 

Resistance levels: 1.0580 1.0615 1.0650 

USD/JPY

The USD/JPY pair rallied to 117.53 at the beginning of the day, but changed course mid European morning with the Japanese yen accelerating its advance in the US session, tracking the poor performance of American stocks and yields. The yield on the benchmark 10-year Treasuries fell 3 basis points at 2.38% percent, while the 30-year bond yield was 3 basis points lower at 2.97%, as fears about a "hard Brexit" and Chinese woes fueled demand for safe-haven assets. China's Central Bank has struggled with a plummeting Yuan last week, and on Saturday, the government said that its foreign exchange reserves fell to a near a six-year low. From a technical point of view, the USD/JPY looks increasingly bearish after the failed attempt to sustain gains beyond the 117.00 figure, and technical readings in the 4 hours chart support a new leg lower, as the price  retreated quite fast from its 100 SMA, while the RSI indicator maintains its bearish slope around 43. In the same chart, the 200 SMA has provided a strong dynamic support last week, currently standing around 115.60, with a break below it opening doors for a downward extension towards 114.00 a long term Fibonacci support. 

Support levels: 116.00 115.55 115.10 

Resistance levels: 116.60 117.00 117.45

GBP/USD

The GBP/USD pair fell to 1.2123, its lowest since October 28th, following comments from UK's Prime Minister, Theresa May. May said that the UK government is not actually interest in keeping bits of membership of the EU, somehow hinting that the kingdom will get out of the single market. "We’re leaving; we’re coming out,” she said in a televised interview last Sunday. Additionally, she pledged to trigger the Art. 50 of the Lisbon treaty by the end of March, and while she also added that she will seek for the  “best possible deal for UK companies to be able to trade in and within the EU and European companies to operate and trade within the UK.” Later on the day, May said that the media misrepresented her comments, but the damage was already done. The GBP/USD pair reached extreme oversold conditions, but remains well below the 1.2200 level, unable to attract buyers, and poised to extend its decline, given that in the 4 hours chart, the price accelerated its slide far below a now bearish 20 SMA, the Momentum indicator keeps heading south, despite being in extreme oversold territory, whilst the RSI indicator holds around 32, losing its bearish strength, but far from reversing it. October 25th low, at 1.2088 is the level to watch, as a break below it will open doors for a test of the critical 1.2000 figure. 

Support levels: 1.2125 1.2085 1.2050

Resistance levels: 1.2200 1.2240 1.2290

AUD/USD

The Aussie was among the most benefited from dollar's weakness, with the AUD/USD pair reaching a fresh 4-week high of 0.7373 in the US afternoon, also underpinned by continued gains in base metals. Data released at the beginning of the day showed that Australian Building Permits rebounded in November after sinking in October, up by 7.0% monthly basis,  against an upwardly revised slump of 11.8% in the previous month. The YoY figure resulted at -4.8%, against previous -24.9%. The country will release November Retail Sales´ figures during the upcoming Asian session, expected up by 0.4% from previous 0.5%. Technically, the pair has managed to break above a key technical level, the 50% retracement of its latest bearish run at 0.7340, where in the 4 hours chart, it's also the 200 EMA,  while holding above a bullish 20 SMA, all of which supports some further advances. In the same chart, the Momentum indicator has lost upward strength and turned lower, barely holding above its 100 level, but the RSI indicator keeps nearing overbought readings. The 61.8% retracement of the same slide comes at 0.7390, the level to surpass to confirm further gains this Tuesday. 

Support: levels: 0.7340 0.7300 0.7270  

Resistance levels: 0.7390 9.7420 0.7450 

Dow Jones

Wall Street closed mixed, with the DJIA down 76 points or 0.38%, to close at 19.887, 38, and the S&P down 8 points to 2,268.90. The Nasdaq hit an all-time high of 5,541.08 before closing at 5,531.82, up by 10 points. A sharp decline in oil prices led energy companies lower, weighing on the Dow. Exxon Mobil closed 1.65% lower, the worst performer within the Dow, while Merck led gainers' list, up by 1.38%. The Dow is poised to extend its decline at least short term, as in the daily chart, the benchmark is now pressuring a horizontal 20 DMA, while technical indicators have turned lower, the Momentum indicator still around its 100 level, and the RSI heading south around 59. In the shorter term, and according to the 4 hours chart, the Dow presents a moderate downward potential, as the index is below its 20 SMA and currently breaking below the 100 SMA, whilst technical indicators are hovering around their mid-lines, with no certain directional strength. 

Support levels: 19,853 19,806 19,758    

Resistance levels:  19,943 20,000 20,045 

FTSE 100

The FTSE 100 closed at  another record high of 7,237.77, up by 27 points or 0.38%, helped by an advance in the mining sector, and a weaker Pound that usually boost the profits of the many multinational companies listed on the Footsie. Glencore was the best performer, up by 3.55%, followed by Randgold Resources that gained 2.23%. Capita led losers' list, down by 2.91%. The daily chart shows that the index maintains the positive tone seen on previous updates, given that the RSI indicator keeps heading north around 75, whilst the Footsie develops well above all of its moving averages. The Momentum indicator in the mentioned time frame has turned modestly lower within positive territory, rather reflecting the limited intraday range than suggesting upward exhaustion. In the 4 hours chart, the 20 SMA keeps heading higher below the current level, while the technical indicators lack directional strength, but hold within positive territory, in line with the larger term perspective.  

Support levels: 7,178 7,146 7,110 

Resistance levels: 7,239 7,270 7,320

DAX

The German DAX shed 35 points this Monday, to close at 11,563.99, with most European equity benchmarks closing lower. UK's Theresa May comments about leaving the EU spurred demand for safe-haven assets, weighing on local stocks. Banking stocks were mostly in the red,  with Deutsche Bank shedding 3.26% and Commerzbank 1.98% within the DAX. The decline was offset by gains in mining and automakers, with Volkswagen leading the German index higher, up by 4.47%. Technically, the daily chart for the DAX shows that it held within its last week's range, still above a bullish 20 SMA, and with the RSI indicator turning south around 70, indicating a possible downward corrective movement ahead. In the same chart, the Momentum indicator heads steadily lower above its 100 level, but with limited downward strength. In the 4 hours chart, the index retains the neutral stance seen on previous updates, standing a few points below a horizontal 20 SMA, and with technical indicators heading nowhere around their mid-lines. 

Support levels: 11,512 11,458 11,402

Resistance levels: 11,581 11,623 11,689

Nikkei

A bank holiday in Japan kept the Nikkei closed this Monday, with the latest registered close in the index at 19,454.33 on Friday. In futures trading, the benchmark advanced up to 19,702 at the beginning of the week, a fresh over 1-year high, but turned south and stands now a few points below Friday's low, tracking the negative mood among European and American traders. Technically, the daily chart shows that the index retreated towards its 20 DMA, now flat around 19,371 and the immediate support, while the Momentum indicator is flat around the 100 level and the RSI indicator turned lower, but holds around 57, all of which increases the risk of a bearish extension, particularly on a break below the mentioned 20 DMA. In the shorter term, and according to the 4 hours chart,  the risk is also towards the downside, as the index s now below its 20 SMA, whilst technical indicators hold within negative territory, with no clear directional strength. 

Support levels: 19,371 19,325 19,257 

Resistance levels: 19,480 19,552 19,610

Gold

Gold prices extended their gains to a fresh 6-week high this Monday, quoting as high as $1,186.09 a troy ounce and ending the day not far below it. The bright metal trimmed post-Payroll losses, and despite the advance is being moderated by speculation of a faster pace of rate hikes in the US, the rally could extend over the next few sessions. The buying potential is being backed by physical demand and technical readings, as in the daily chart, buying interest around the 23.6% retracement of the latest daily slump contains the downside, whilst the price extended far above its 20 SMA, and technical indicators have advanced to fresh 2-month highs within positive territory. In the 4 hours chart, the 20 SMA has continued to provide an intraday dynamic support, and maintains its upward strength below the current level, while the RSI indicator heads north around 67, also supporting further gains. The Momentum indicator, however, is drawing a bearish divergence that still needs to be confirmed, pressuring the 100 level after being able to extend its advance between positive territory. 

Support levels: 1,173.10 1,165.20 1,156.15    

Resistance levels: 1,186.10 1,197.20 1,208.00

WTI Crude Oil

Crude oil prices fell to almost one-month low, with West Texas Intermediate futures below $52.00 a barrel for the first time since December 16th. News that Iraq, OPEC's second-largest producer reached an export record high of 3.51 million barrels per day in December, dented investors confidence in the organization's deal to cut production. Iraq's oil ministry later declared that the record production won't affect the country's decision to lower its production in January, but investors turn quickly skeptical when it comes to the OPEC. Hovering around $51.90 a barrel, the daily chart for WTI shows that the price has broken below a now flat 20 SMA, whilst technical indicators have turned lower, entering bearish territory and anticipating some further slides. In the 4 hours chart, the price has extended below its 20 and 100 SMAs, both lacking directional strength and around the 53.00/53.30 region, while technical indicators present strong bearish slopes near oversold territory, favoring a new leg lower on a break below 51.55, the immediate support. 

Support levels: 51.55 50.80 50.30    

Resistance levels: 52.60 53.30 54.10

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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.