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The EUR/USD pair fell to its lowest for this week

29th December 2016

EUR/USD

The EUR/USD pair fell to its lowest for this week, printing 1.0371 during US trading hours, to settle below the 1.0400 level by the end of the day. There was no clear catalyst for dollar's demand, and even US data disappointed, as the Pending Home Sales Index, a forward-looking indicator based on contract signings, declined 2.5% percent to 107.3 in November from 110.0 in October, when it rose by 0.1%. The  greenback, however, retained its positive tone particularly against the EUR, with the pair now poised to retest the multi-year low posted last week at 1.0352. 

Technical indicators in the 4 hours chart have gathered bearish momentum, maintaining their downward slopes near oversold readings, whilst the price broke through a now bearish 20 SMA, providing a dynamic resistance around 1.0445, the comfort zone from earlier this week, all of which favors a new leg lower for the upcoming sessions. As long as the price remains below 1.0420, now the immediate resistance, the pair has scope to retest its year low of 1.0352, with further declines below it opening doors for a test of the 1.0206 level, July 2002 monthly high. 

Support levels: 1.0350 1.0320 1.0290

Resistance levels: 1.0420 1.0455 1.0490

USD/JPY

Dollar's demand was not enough to push the USD/JPY pair higher, with the pair down to 117.05 ahead of Wall Street's close, as falling stocks weighed on the pair. US equities edged sharply lower after the Dow failed to take the 20,000 threshold, forcing speculative interest to book profits ahead of the year-end.  Also, US Treasury yields edged lower after an uptick at the beginning of the day, with the 10-year benchmark settling at 2.55% from previous 2.56%.  During the upcoming Asian session, the Bank of Japan will release its Summary of Opinions, which includes BOJ's projections for inflation and economic growth. Given Kuroda's optimistic speech earlier this month, the numbers should converge with his words, that is, suffer modest upward revisions from previous ones, in order to prevent the JPY from appreciating. Technically, the price broke below the base of the  small wedge that dove it for most of this last two weeks, invalidating the continuation figure. In the 4 hours chart, the price remains well above its moving averages, although technical indicators have turned lower, now crossing below their mid-lines, anticipating some further declines ahead, particularly if local share markets also fall.  

Support levels: 116.90 116.55 116.20

Resistance levels: 117.40 117.80 118.10 

GBP/USD

The British Pound extended its negative momentum against the greenback, falling down to 1.2200, its lowest level since October 31st.  Fresh weakness came after the pair failed to regain the 1.2300 level, and a fresh bout of dollar's demand. The British Bankers' Association report showed that the number of Mortgage Approvals in November decreased by more-than-expected, coming in at 40.659K  against a previously revised 40.835K, but the report also showed that consumer credit growth continues to be strong, despite falling back a little in the same month, as a result of strong retail sales in recent months.  The pair bounced modestly from the mentioned daily low, meeting intraday selling interest at 1.2240, now the immediate resistance. Technically, and according to the 4 hours chart, the risk remains towards the downside, given that the price remains contained below a sharply bearish 20 SMA, and that the RSI indicator reached oversold readings before entering a consolidative stage. In the same chart, the Momentum indicator lacks directional strength, holding right below the 100 level, as the pair entered a consolidative phase. Further slides below 1.2200 will expose the 1.2082 level, October 25th daily low.

Support levels: 1.2200 1.2170 1.2140

Resistance levels: 1.2240 1.2285 1.2330 

AUD/USD

The AUD/USD pair advanced at the beginning of the day up to 0.7219, but quickly retreated below the 0.7210 critical Fibonacci resistance. The advance was triggered by a recovery in base metals that boosted local shares, although it was short lived, as the market is still looking to re-buy the greenback at lower levels. The pair resumed its slide with London opening, but held above the monthly low posted last week at 0.7159. There are no macroeconomic releases scheduled in Australia for the upcoming Asian session, so the pair will likely trade on sentiment, tracking local markets' movements. From a technical point of view, and given the inability of the pair to remain above the mentioned resistance, the risk remains towards the downside, moreover as the 4 hours chart shows that the price is below a bearish 20 SMA, whilst technical indicators hold within negative territory, despite having posted modest recoveries from their daily lows. As commented on previous updates, further declines will depend on a break below 0.7145, May monthly low.

Support: levels: 0.7145 0.7100 0.7065

Resistance levels: 0.7210 0.7250 0.7290 

Dow Jones

Wall Street edged lower with the Dow Jones Industrial Average shedding 111 points to close at 19,833.68. The Nasdaq Composite lost 48 points and closed at 5,438.56, while the S&P ended 0.84% lower at 2,249.92. Stocks started the day with a positive tone, but losses in the tech sector dragged US majors' benchmarks lower. Also, sentiment among stocks' traders deteriorated after the Dow failed to reach the 20,000 level, with only one component closing in the green, Travelers Cos., up by 0.08%. Caterpillar on the other hand, was the worst performer, down by  1.48%.  Profit taking may have also had something to do with the sharp intraday decline ahead of the year-end. From a technical point of view, the daily chart shows that the index is still above a bullish 20 DMA, currently at 19,781, while the Momentum indicator heads lower and is about to cross its 100 level towards the downside, and the RSI indicator finally retreated from overbought territory, having been above 70 since early November. In the 4 hours chart, technical indicators head sharply lower within bearish territory, whilst the index moved below a horizontal 20 SMA, supporting some further declines on a break below the mentioned support.

Support levels: 19,781 19,740 19,688    

Resistance levels: 19,856 19,931 19,978

FTSE 100

The FTSE 100 reached a new all-time closing high this Wednesday, up daily basis by 38 points or 0.54% to 7,106.08. A weaker Pound and strong gains in the mining sector led the benchmark higher after a long holidays weekend. Silver miner Fresnillo topped winners' list, gaining 5.22%, followed by gold producer Randgold Resources which added 4.88%. A modest advance in oil prices backed the energy sector, with BHP Billiton also within the best performers, up by 4.29%. The Footsie, however, trimmed most of its daily gains in futures trading, undermined by falling US stocks. Technically, the index maintains a positive tone in its daily chart, as the Momentum indicator eased modestly within bullish territory, whilst the RSI indicator continues heading higher around 65 and the 20 DMA maintains its upward slope below the current level. In the 4 hours chart, a bullish 20 SMA stands at 7,054, providing an immediate support, while the RSI indicator retreated within positive territory, suggesting the benchmark may ease further on a break below the mentioned support. 

Support levels: 7,054 7,010 9,972

Resistance levels: 7,080 7,136 7,175

DAX

European equities closed mixed, but not far from their daily openings, with the German DAX up by 2 points, to settle at 11,474.99. Trading was subdued amid low volumes and the absence of macroeconomic data in the region. Among the DAX, the industrial group ThyssenKrupp was the best performer, up by 0.98%, followed by  retailer Adidas that added 0.96%. The banking sector continued to underperform, with Commerzbank down by 2.07%, and Deutsche Bank shedding 1.41%. The German benchmark held within its latest range, easing modestly in futures trading as sentiment deteriorated with Wall Street's slide. Daily basis, technical indicators retreated from extreme overbought territory, but the RSI holds above 70, while the 20 DMA maintains a strong upward slope far below the current level, indicating that the bullish trend remains firm in place. In the 4 hours chart, the index maintains a neutral stance, as it keeps hovering around a horizontal 20 SMA, while the Momentum indicator heads nowhere around its 100 level and the RSI retreated within positive territory, now standing at 52. 

Support levels: 11,415 11,373 11,338

Resistance levels: 11,484 11,520 11,566

Nikkei

The Nikkei 225 closed flat this Wednesday at 19,401.72, down by 1 point. Japanese data released overnight came in mixed, as Industrial Production rose by less-than-expected in November according to preliminary estimates, up by 1.5% in the month, against 1.7% forecasted. Retail trade however, came in better than expected, rising by 1.7% in the same month, against expectations of a 0.9% advance. Within the Nikkei, export-oriented equities retreated, with Toshiba down 20.43% after the company said it expects to record a loss of "several billion dollars" related to completing the US nuclear power projects purchased by a subsidiary, Westinghouse Electric. The index retreated further in after-hours trading, now hovering around 19,300 ahead of the Asian opening, and with the daily chart showing that the Momentum indicator has retreated towards its mid-line, while the RSI also heads south around 63, supporting some further slides. The 20 DMA in the mentioned chart heads higher, providing a strong support in the 19,190 region. Shorter term, the 4 hours chart presents a bearish stance, as the benchmark stands at fresh 2-week lows below its 20 SMA, while technical indicators hover within bearish territory. 

Support levels: 19,260 19,192 19,145

Resistance levels: 19,368 19,420 19,475

Gold

Gold prices extended their gains this Wednesday, with spot closing the day at $1,141.90 a troy ounce. Bright metals enjoyed some demand during the Asian session, retreated on dollar's intraday strength, and later recover amid falling equities in the US. The recovery seems barely corrective, as the price remains far below the 23.6% retracement of its latest daily slump, at 1,173.25. From a technical point of view, the daily chart shows that the price remains capped by a bearish 20 DMA, currently at 1,147.05, providing an immediate resistance for this Thursday. In the same chart, technical indicators have corrected further higher within bearish territory before turning flat, indicating diminishing buying interest. In the shorter term, and according to the 4 hour chart, the commodity presents a limited upward potential, as the price has been holding above a modestly bullish 20 SMA, whilst technical indicators are aiming higher within positive territory, still far below their previous weekly highs.  

Support levels: 1,132.10 1,127.70 1,122.60    

Resistance levels: 1,147.05 1,158.90 1,165.10

WTI Crude Oil

Oil prices extended their latest gains, with West Texas Intermediate crude futures ending the day a few cents below a fresh weekly high of $54.35 a barrel. Prospects of major oil producers trimming output by almost 1.8 million barrels a day starting this January, have supported the commodity for most of this month, with the US benchmark having traded as high as 55.42. Technically, the black gold has partially lost its upward momentum, as in the daily chart, the 20 DMA eased, now providing a dynamic support around 52.60, while the Momentum indicator is crossing its 100 level towards the downside, and the RSI turned flat around 62. The readings are not enough to suggest an upcoming downward move, but the price will need to accelerate beyond the 54.40, now the immediate resistance, to confirm a new leg higher for this Thursday. In the 4 hours chart,  technical indicators have retreated from fresh weekly highs, holding within positive territory, whilst the 20 SMA heads modestly higher around 53.30.

Support levels: 53.30 52.70 52.10    

Resistance levels: 54.40 54.90 55.45

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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.