The EUR/USD pair fell to its lowest since July 25th

EUR/USD

The EUR/USD pair fell to its lowest since July 25th, closing Friday a couple of pips above its daily low,  and not far from July's low of 1.0951, as the American dollar remained on demand on continued expectations of another rate hike in the US before the year-end. Risk appetite came back early Friday, as fears over a Chinese economic slowdown receded following better-than-expected  local inflation data. Further supporting the greenback was a modest up-tick in US retail sales in September, up by 0.6% compared to August, matching expectations. The core figure, ex-autos, came in at 0.5%, beating expectations of a 0.4% reading. Also, the producer price index was slightly firmer than expected up 0.7% year-on-year basis, and by 0.3% in September from previous 0.0%. Dollar's momentum continued in spite of a downward surprise in Michigan's consumer sentiment index that plunged to 87.9 from previous 91.2 in October, it's lower in over a year, attributed to the contentious presidential election campaign 

During this upcoming week, attention will center on US September CPI figures, as a pickup, particularly in core readings, will further increase hopes of a FED's hike. Additionally, the ECB is having an economic policy meeting, although no new announcements are expected from the ECB,  largely expected to maintain the focus on QE's implementation.

As for the technical picture, this last week's decline has left daily indicators in oversold readings, but with a strong downward momentum, indicating that the pair may extend further it's decline before pulling back some in correction mode. In the same chart, the price has finally moved away from the congestion of moving averages that anyway persists  around 100 pips above the current level. In the 4 hours chart, the 20 SMA heads sharply lower, offering a dynamic resistance around 1.1025 for this Monday, while the Momentum has turned flat within bearish territory, after failing to overcome its mid-line, while the RSI indicator heads south around 26, also supporting additional declines. The immediate support is the mentioned July low at 1.0950, followed by the post-Brexit low, at 1.0910. 

Support levels: 1.0960 1.0910 1.0860    

Resistance levels: 1.0990 1.1025 1.1060

USD/JPY

The USD/JPY pair posted its highest weekly close in over two months, settling at 104.22, underpinned by dollar's broad strength. Up for a third consecutive week, there are two factors behind the limited momentum of the pair, when compared with other major crosses. In one hand, stocks continue hesitating, as uncertainty maintains equity traders side-lined. Such uncertainty is a consequence of Brexit woes, and upcoming US elections. The other reason is BOJ's neutral stance, as despite Central Bank's officers have remarked plenty of times that they would implement further easing "without hesitation" if needed, the likelihood of such even taking place in the near-term is quite low. Last Thursday, BOJ´s board member Harada admitted that the achievement of the price target has been delayed. The daily chart shows that the price is holding near the weekly high of 104.63, the immediate resistance, while also standing above its 100 DMA, after surpassing it early October, now a critical dynamic support at 102.60. In the same chart, technical indicators have entered in a consolidative phase near overbought territory, still favoring a new leg higher. In the 4 hours chart, the 100 SMA is accelerating its advance, now converging with the 200 SMA around 102.40, while the RSI indicator consolidates around 60. The momentum indicator, however, has turned lower and stands around its 100 level, rather reflecting the lack of upward strength than suggesting a downward move for this Monday. 

Support levels: 103.90 103.50 103.10

Resistance levels: 104.65 105.00 105.50

GBP/USD

The GBP/USD pair fell for a sixth consecutive week, despite fears over a "hard Brexit" eased during these last few days, after UK's PM Theresa May accepted a parliamentary debate before pulling the trigger on the Art. 50 by the ends of March. Nevertheless, the positive headline was barely enough to decelerate Pound's decline, which anyway maintains a strong bearish tone. Over the weekend, German´s Chancellor, Angela Merkel,  said that Britain could not get concessions on the freedom of movement while retaining full  access to the European single market, or other countries would want the same. The headline is no surprise, as its clearly reflecting EU leader's stance, but indeed, can put the Sterling under further selling pressure after the weekly opening.  The daily chart shows that technical indicators keep heading south despite being in extreme oversold levels, while the strength of the decline has left the price far below its moving averages. In the same chart, it's clear that brief recoveries attract selling interest that results in the price falling to new lows, also indicating the strong downward risk. In the shorter term, and according to the 4 hours chart, the bearish potential is also clear, given that the price has been unable to recover above a bearish 20 SMA, while the RSI indicator maintains its bearish slope around 37. 

Support levels: 1.2130 1.2080 1.2035 

Resistance levels: 1.2225 1.2270 1.2320 

AUD/USD

The AUD/USD pair managed to close the week flat around the key 0.7600 level, with the Aussie refusing to give up to dollar's strength. The Aussie surged on Friday, following Chinese inflation data, as the CPI rose by more than expected in September, up by 1.9% when compared to a year before,  a by 0.7% monthly basis. Producer price inflation left deflationary territory for the first time since 2011, up 0.1% year-on-year, from previous -0.8%. The Australian economy, however, is still struggling, according to the RBA's semi-annual financial stability review, which showed that the housing market represents a systemic risk to the local economy, due to the size of loans weighing on banks.  The daily chart shows that the price fell briefly below a daily ascendant trend line coming from May's low of 0.7148, before regaining the 0.7600 level, indicating that buying on dips is still strong, although technical readings favor a downward move, given that the price has been unable to settle above its 20 SMA, while the Momentum indicator stands flat below the 100 level and the RSI indicator hovers in neutral territory. In the 4 hours chart,  the 20 SMA heads north around 0.7570 providing an immediate support, while technical indicators lack directional strength, barely holding within positive territory. 

Support levels: 0.7570 0.7530 0.7490    

Resistance levels: 0.7635 0.7670 0.7710 

Dow Jones

Despite posting some modest gains last Friday, Wall Street closed the week with notable losses, weighed by further US encouraging data, supportive of a US rate hike before the year end. The Dow Jones added 39 points in the last trading day of the week, to end at 18,138.88. The Nasdaq Composite and the S&P closed the day pretty much flat, barely 0.02% higher each. The Dow Jones Industrial Average traded over 150 points up, fueled by stronger-than-expected earnings results from several major banks, with Goldman Sachs at the top of the list, up by 1.85%, although the benchmark trimmed most of its daily gains ahead of the close. From a technical point of view, the daily chart shows that the index met selling interest around a still bullish 100 DMA,  while technical indicators present modest bearish potential within negative territory. In the 4 hours chart, the index was also rejected from its larger moving averages that are slowly gaining bearish track, while technical indicators hover around neutral territory, with no certain directional strength. 

Support levels: 18,130 18,079 18,020 

Resistance levels: 18,189 18,235 18,303 

FTSE 100

The FTSE 100 closed marginally higher on Friday, up by 35 points or 0.51% to end the week at 7,013.55, paring gains as the Pound decelerated its decline. The index pulled back from record highs reached earlier in the week, as the Sterling bounced on relief over diminishing fears of a "hard Brexit." Nevertheless, the risk of further GBP slides is latent, after weekend's words from German Chancellor Angela Merkel, suggesting that the rest of the EU won't allow the UK to maintain any privilege, exclusives of the union's members. The index may end up benefiting from the headline, in spite of a possible spike of risk aversion at the beginning of the week. Bank-related equities gained, following the lead of their US counterparts, with Barclays up 2.19% and Standard Chartered adding 1.68%. Mining-related equities also gained, following the positive lead from Chinese inflation. From a technical point of view, the daily chart shows that the index extended its Thursday's bounce from a bullish 20 DMA, while technical indicators have turned back higher after correcting overbought conditions, supporting some further gains for this Monday. In the 4 hours chart, however, the upside is being limited by the 20 SMA, now the immediate resistance at 7,051, while technical indicators hover within negative territory, with no certain directional strength. 

Support levels: 6,986 6,934 6,879

Resistance levels: 7,051 7,129 7,170

DAX

European indexes closed sharply higher on Friday, with the German DAX adding 168 points or 1.60% to 10,58.38, supported by a recovery in banking and utilities stocks. Strong earnings in the US financial sector fueled European shares, with Deutsche Bank shares trading as much as 3.4% higher intraday, before settling 1.21% up by the end of the day. RWE AG was the best performer, up 3.22%, while E.ON added 2.67%. From a technical point of view, the German benchmark's daily chart shows that it maintains a neutral stance, having hovered  around a flat 20 SMA for a second consecutive week, as technical indicators continue stuck within neutral territory. Nevertheless, the downward potential seems limited, as the index keeps holding above a bullish 100 DMA, while bouncing on dips towards it. In the shorter term, and according to the 4 hours chart, the technical stance is also neutral, as the index has managed to recover above its moving averages, but technical indicators head nowhere around their mid-lines. 

Support levels: 10,558 10,498 10,445

Resistance levels: 10,614 10,655 10,710 

Nikkei

The Japanese Nikkei recovered some ground on Friday, ending the day at 16,856.37, up by 82 points or 0.49%, as the Japanese yen turned lower on improving risk sentiment, following the release of encouraging Chinese inflation figures. Export-oriented shares were among the best performers, with Pioneer leading winners, up by 6.61%, followed by Fast Retailing that added 4.98%. Modestly higher weekly basis, the daily chart for the benchmark shows that the risk of a bearish move is low, but that the upside potential is still limited, as technical indicators in the mentioned time frame have bounced modestly from their mid-lines, but are below September highs, with limited upward momentum. In the same chart, the index has bounced from a modestly bullish 20 DMA which stands above the 100 and 200 SMAs, the reason why a steeper decline seems unlikely. In the 4 hours chart, the index is a few points above a bearish 20 SMA, while technical indicators head modestly lower within neutral territory. Overall, the index is expected to remain range bound during the upcoming sessions, and follow Wall Street's lead. 

Support levels: 16,847 16,782 16,712

Resistance levels: 16,902 16,975 17,062 

Gold

Spot gold closed the week at $1,251.25 a troy ounce, the lowest close since early June, although it has spent the week in consolidation mode. The commodity fell on Friday, as the dollar traded broadly higher on renewed speculation of a US rate hike. Gold traded as low as % 1,246.02 a troy ounce before settling modestly higher, overall maintaining the bearish potential seen on previous updates. Technically, the daily chart shows that the price remains below the 61.8% retracement of the bullish run between 1,199.51 and 1,375.11 at 1,266.30, while the 20 DMA has extended its decline further, pointing to break below the 200 DMA, this last at 1,286.90. In the same time frame, technical indicators turned modestly lower after a period of consolidation within oversold territory, all of which maintains the risk towards the downside. In the 4 hours chart, the price is developing below a horizontal 20 SMA, now at 1,255.80, while the Momentum indicator is also flat, in neutral territory, and the RSI indicator heads south around 35, supporting the longer term outlook.

Support levels: 1,246.00 1,241.35 1,234.70

Resistance levels: 1,255.80 1,266.30 1,277.05

WTI Crude Oil

Crude oil prices closed modestly lower on Friday, with West Texas Intermediate futures settling, however, above $50.00 a barrel. The black gold pared early week gains after the oilfield services giant, Baker Hughes, reported that the US oil rig count rose by 4 to 432, up for a seventh consecutive week, also weighed by a mixed EIA report stockpiles report, showing that US inventories rose by 4.9 million barrels in the week ended October.7. Skepticism about an OPEC´s  production cut has also limited the rally. Nevertheless, US futures closed higher for  a fourth consecutive week. Technically, the upward momentum has faded, given that in the daily chart, technical indicators keep retreating from overbought levels, heading south above their mid-lines. Still the 20 DMA maintains a strong upward slope around 48.30, being the support to break to confirm a deeper bearish move. In the 4 hours chart, the price is a few cents below a bearish 20 SMA, while technical indicators hover around their mid-lines, failing to provide clear directional signs, but indicating a limited upward potential. 

Support levels: 49.90 49.40 48.70

Resistance levels: 50.60 51.10 51.60