The EUR/USD pair held within a tight 30 pips range this Tuesday

EUR/USD

The EUR/USD pair held within a tight 30 pips range this Tuesday, ending the day not far from Friday's close and still below 1.0461, 2015 yearly low.  There were no macroeconomic releases in the EU, and the calendar will remain scarce this Wednesday in the region, with only some minor reports coming from peripheral countries. In the US however, data surprised to the upside, with the Conference Board Consumer Confidence  Index rising to  113.7 in December, its highest since August 2001, beating expectations of 109.0, and above a previous upwardly revised 109.4. Also, the manufacturing activity expanded in December in two districts according to different surveys. The Richmond index came in an 8 from previous 4, whilst the Dallas one printed 15.5 from previous 10.2. 

From a technical point of view, the pair has made little progress, still contained below 2015 yearly low, although maintaining a strong neutral stance short term, amid reduced volumes all through the financial world. In the 4 hours chart, the price continues developing below a bearish 20 SMA, currently at 1.0530, while the Momentum indicator has continued correcting higher within negative territory, and the RSI indicator remains flat around 40, suggesting that the upward potential remains limited. The risk of  a steeper upward move is also limited by fundamentals, given that macroeconomic data support the positive sentiment towards the greenback. Also, little downward action is to be expected as long as the price holds above 1.0420. 

Support levels: 1.0420 1.0390 1.0350 

Resistance levels: 1.0465 1.0500 1.0530

USD/JPY

The USD/JPY saw a modest uptick this Tuesday, advancing up to 117.61 in the US session following the release of encouraging US data manufacturing and confidence data, with this last at its highest in over 15 years. In Japan household spending fell in November by 1.5%, down for tenth month in-a-row, while inflation fell for ninth consecutive month, also in November, as the core CPI, which excludes volatile fresh food prices, slipped 0.4% when compared  to a year earlier, against a median market forecast for a 0.3% fall, with the economy still struggling with deflationary pressures, despite Kuroda's encouraging outlook for 2017. The pair continued trading within a well-defined wedge, clear in the daily chart, although the price is approaching to the vertex, and if current range trading continues, the figure will become invalid. In the 4 hours chart, technical indicators are neutral, still heading nowhere around their mid-lines, whilst the price holds well above bullish 100 and 200 SMAs, all of which indicates that the dominant bullish trend remains in place, despite the absence of activity seen these days. 

Support levels: 117.10 116.55 116.20

Resistance levels: 117.60 117.95 118.30 

GBP/USD

The GBP/USD pair ended the day pretty much flat a handful of pips below the 1.2300 level, with trading around the Pound limited by an extension of the Christmas holiday as in the UK, and given that Christmas was on Sunday, the holiday was moved to this Tuesday, following the Boxing Day bank holiday taking place as usual on Monday 26th. There were no relevant news coming from the UK, although this Wednesday, the UK will release its November Mortgage Approvals, hardly a market mover. The main motor for the Sterling continues to be speculation over the upcoming Brexit, and whether the kingdom will be forced to face a hard exit from the EU and therefore be at risk of an economic collapse, once outside the EU single market. The pair recovered some ground in the US afternoon, but remains well below 1.2330, a critical static resistance. Technical readings in the 4 hours chart, despite lacking directional strength, maintain the risk towards the downside, given that the 20 SMA maintains a sharp bearish slope above the current level, whilst technical indicators have corrected higher, but remain within negative territory. Below 1.2228, the risk of a steeper decline increases, as the level stands for the monthly low. 

Support levels: 1.2228  1.2200 1.2170

Resistance levels: 1.2300 1.2330 1.2385 

AUD/USD

The Aussie posted some modest gains against its American rival this Tuesday, underpinned by a sharp advance in gold prices, due to some strong psychical demand in India, and firmer oil prices. The AUD/USD pair settled around 0.7185 after meeting selling interest on an approach to the 0.7200 level. The pair can see a larger recovery on a break above 0.7210, the 61.8% retracement of the early year rally, and despite being quite close, such movement seems unlikely short term, as technical readings continue supporting a bearish case. In the 4 hours chart, the 20 SMA has accelerated its slide below the mentioned resistance, whilst the Momentum indicator retreats within bearish territory after failing to surpass its 100 level, and the RSI indicator remains flat near 30. Despite limited intraday volumes, a steeper slide can be seen on a break below 0.7145, May monthly low, with scope to extend sub-0.7100 during the upcoming sessions. 

Support: levels: 0.7145 0.7100 0.7065

Resistance levels: 0.7210 0.7250 0.7290 

Dow Jones

US major indexes closed the day with gains, as strong manufacturing readings fueled hopes for steadier growth during 2017 in the US. Nevertheless, trading remained subdued, with the Dow Jones Industrial Average closing  the day up by just 11 points at 19,945.04, whilst the S&P added 5 points and ended at 2,268.88. The Nasdaq Composite advanced to a new record high before settling at 5,487.44, up by 24 points or 0.45%. As for the DJIA technical picture, the benchmark advanced up to 19,978 intraday, barely 6 points away from the all-time high posted this December, and still poised to test the 20,000 threshold, and still bullish, as the 20 DMA continues advancing below the current level and well above the larger ones, whilst the RSI indicator turned modestly higher around 76. The Momentum indicator in the mentioned chart has pulled further lower within positive territory, as a consequence of diminished volumes rather than the absence of buying interest. Shorter term, and according to the 4 hours chart, the neutral stance persists, with the index now a few points above a horizontal 20 SMA and technical indicators heading modestly lower within positive territory. 

Support levels: 19,884 19,823 19,746    

Resistance levels: 19,984 20,020 20,065 

FTSE 100

There was no activity in the Footsie this Tuesday amid the Christmas holiday, with the latest registered close at 7,068.17. Given Pound's weak tone, the index may continue advancing this Wednesday, albeit gains are expected to be limited amid the ongoing winter holidays. As commented on previous update, the benchmarks stands not far away from this year high of 7.136, posted last October, and in the daily chart, technical readings support further gains as the index stands at its highs for the month, while the 20 DMA has crossed above the 100 DMA, both below the current level, and the RSI indicator continues heading higher around 65. In the 4 hours chart, the technical outlook is also positive, as a bullish 20 SMA continues providing intraday support, now around 7,037, while technical indicators lack directional strength, but hold within positive territory. 

Support levels: 7,037 7,000 9,972

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

DAX

European equities advanced in thin trading, with the German DAX up 0.19% or 22 points, to close the day at 11,472.24. Banks closed lower, with the sector undermined by ECB's comments, pointing that troubled Italian lender Monte Dei Paschi di Siena needs about an €8.8 billion bailout, against previous estimates of €5 billion. Deutsche Bank led losers' list, down by 1.38% whilst Commerzbank shed 0.36%. Technically, the Momentum indicator retreated further from overbought readings, whilst the RSI indicator consolidates around 73 in the daily chart, indicating that the downside potential remains well limited, also supported by a bullish 20 DMA that Extended its advance above the 100 and 200 SMAs. Shorter term, however, and due to limited holiday volumes, the index remains neutral, barely above a flat 20 SMA and with the Momentum indicator horizontal around its 100 line, and the RSI retreating modestly from near overbought levels. 

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

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

Nikkei

The Nikkei 225 Index closed this Tuesday 6 points higher at 19,403.06. Gainers were offset by a sharp decline in Toshiba, which ended the day 11.62% lower after saying that it was considering booking a goodwill impairment loss of several hundreds of billion yen.  A weaker yen, however, kept export-oriented equities afloat. The index advanced modestly in after-hours trading, tracking Wall Street's gains, poised to open the day around 19,427. In the daily chart, the index holds well above a bullish 20 DMA, while the Momentum indicator keeps retreating within positive territory, mostly due to falling volume rather than to upside exhaustion, while the RSI holds around 69. In the 4 hours chart, the benchmark maintains its neutral stance seen on previous updates, stuck around a horizontal 20 SMA and with technical indicators heading nowhere around their mid-lines. A downward corrective movement can be expected these day, although it would take a slide below 19,307, to confirm a steeper downward move heading into January. 

Support levels: 19,362 19,307 19,260

Resistance levels: 19,487 19,542 19,590

Gold

Spot gold jumped to a fresh two-week high of $1,150.74 a troy ounce, boosted during the past Asian session by physical demand in India, the world's largest consumer of gold. The movement was exacerbated by extremely thin volume, although the commodity trimmed most of its daily gains during the US afternoon, on the back of better-than-expected manufacturing and consumer sentiment figures, to settle around 1,137.80. The daily chart for the bright metal shows that the rally stalled around a bearish 20 DMA, while technical indicators have recovered from oversold levels, but remain within negative territory. In the 4 hours chart, spot broke above the upper end of the descendant channel that contained the price since mid November, and completed a pullback to the descendant trend line before settling above it. Also, the price is above a directionless 20 SMA, while technical indicators have retreated within positive territory. All in one, the downside seems limited short term as long as the price holds above the 1,132.00 region, although intraday gains will likely continue attracting speculative selling interest. 

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

Resistance levels: 1,142.60 1,150.75 1,158.90 

WTI Crude Oil

Crude oil prices edged higher this Tuesday, with Brent for March delivery well above $56.00 a barrel and West Texas Intermediate crude futures trading a handful of cents below $54.00 a barrel by US close. There was no catalyst for the ongoing recovery in crude prices, but hopes that OPEC and non-OPEC countries will reduce oil output by nearly 1.8 million barrels per day starting as soon as this January. Movements could have been exacerbated also by thin holiday's trading. The technical picture for WTI is bullish, as the price surpassed last week's high, while recovering further from a bullish 20 DMA in the daily chart. In the same time frame, technical indicators head modestly higher within positive territory, with the RSI at 62, but the Momentum below previous highs. In the 4 hours chart, the price is back above its 20 SMA that anyway remains flat, the Momentum indicator remains directionless above its 100 level, while the RSI indicator aims north around 65, favoring additional advances for this Wednesday. 

Support levels: 53.35 52.70 52.10    

Resistance levels: 54.20 54.90 55.45