EUR/USD still unable to find clear direction

EUR/USD

The EUR/USD pair is still unable to find a clear direction, with uncertainty keeping most major pairs confined to tight intraday ranges. US inflation beat expectations, but was not enough to dispel doubts over the FED's next move. Inflation rose by the most monthly basis in more than three years, up by 0.4% from previous 0.1%. Compared to a year before, it came in at 1.1% against 0.9% previous, whilst the core YoY was unchanged at 2.1%.  Considering that FED officers have been reiterating that two rate hikes are a reasonable prospect for this 2016, and that with September elections is most likely that the FED will refrain to act then, the Central Bank has June and December meetings, which are both live ones, to announce the hikes, and that it´s what is keeping investors on their toes these days. 

The pair fell down to 1.1301 after the release of US CPI figures,  but quickly reversed course and posted a daily high of 1.1348. Now pretty much flat on the day, the 4 hours chart for the pair suggests that the risk remains towards the downside, given that the intraday spike, stalled around the 38.2% retracement of the latest daily bearish run, and that the price is still unable to settle above a bearish 20 SMA although the technical indicators lack enough  strength to confirm some directional move. FOMC Minutes to be released this Wednesday can shed some light over the US future, yet as long as above 1.1280, the downward risk of the pair will be limited.

Support levels: 1.1280 1.1240 1.1200

Resistance levels: 1.1340 1.1370 1.1410

USD/JPY

The USD/JPY pair was unable to rally beyond the 61.8% retracement of its latest bearish run at 109.55, having, however, managed to post a fresh weekly high of 109.63. US positive data was not enough to boost the pair, as US stocks turned sharply lower on speculation the FED can act next June. The pair held above the 50% retracement of the same rally around 108.70, maintaining a neutral stance in the short term, but with the downside limited, given that in the 1 hour chart, the price is holding above its 100 SMA, whilst the technical indicators have lost upward strength, but remain within positive territory. In the 4 hours chart, the technical indicators have turned flat around their mid-lines, whilst the price stands a few pips above a bearish 200 SMA. The Japanese yen can advance during the upcoming Asian session, particularly if local share markets follow their overseas counterparts, with a break below 108.70 opening doors for a continued decline towards the 108.00 region. 

Support levels: 108.70 108.30 107.90 

Resistance levels: 109.55 110.10 110.60

GBP/USD

The GBP/USD pair advanced up to the higher end of its latest range, reaching 1.4521 after news showed that the  "remain" vote is now 15 points ahead of the  “leave” vote in a UK referendum poll. The pair however, met strong selling interest around a major Fibonacci resistance, the  38.2% retracement of its latest bearish run, and retreated even before the release of poor UK data. UK inflation came in at 0.3% yearly basis, falling short of expectations, and down from 0.5% in the year to March. Monthly basis, it rose by 0.1%, below the 0.3% forecast and the 0.4% previous. This Wednesday, the UK will release its latest employment data, and the market is currently betting for a slight cold down in the sector, which means that the Pound can get a boost on better-than-expected figures, mostly as fears over a Brexit keep diminishing. In the meantime, and in the short term, the technical outlook is bearish as in the 1 hour chart, the price is now below its 20 SMA, whilst the technical indicators head south within negative territory. In the 4 hours chart, however, additional declines are seen limited as the technical indicators are still above their mid-lines, with the RSI already heading south, and the price holding above its 20 SMA, now flat in the 1.4410 region, and the level to break to confirm additional declines down to 1.4320.

Support levels: 1.4410 1.4370 1.4320

Resistance levels: 1.4490 1.4525 1.4560

AUD/USD

The Australian dollar gained strongly at the beginning of the day, as the RBA Minutes revealed that most voting members were reluctant to cut rates earlier this month. But the document also showed that the decision was based on broad based weakening of inflation pressures, which could not be explained by temporary factors. The market is not so sure now about two more rate cuts ahead for this year, and some clues on the case can come this Thursday, when the country releases its latest employment data.  The AUD/USD pair recovered up to 0.7366 after the news, but returned to the 0.7320 region, where it stands ahead of the Asian opening, stuck around the 50% retracement of this year rally. Short term, the 1 hour chart shows that the price is a few pips below a bearish 20 SMA, whilst the technical indicators head lower within negative territory, not enough to confirm a bearish continuation, given that in the 4 hours chart, the technical indicators remain above their mid-lines and the price above the 20 SMA. A break below 0.7290 however, will confirm a downward continuation for this Wednesday, with scope then to test the 0.7200 price zone.

Support levels: 0.7290 0.7250 0.7210 

Resistance levels: 0.7370 0.7410 0.7450

Dow Jones

The wild swings in Wall Street continued this Tuesday, as all of the three major indexes reversed most of their Monday´s gains. The DJIA fell 180 points to close at 17,529.90, while the Nasdaq fell 1.25%, to 4,715.72 and the S&P shed 0.94% to 2,047.21. Wall Street was up on the day until the release of US CPI figures, much better-than-expected, which resulted in speculative interest rushing to profit from latest gains, on renewed expectations of a FED rate hike sometime this year. The initial slide turned into a sell-off in the DJIA that fell down to 17,464,  a major static support region. Having bounced modestly from the mentioned low, the daily chart shows that the index remained capped by a bearish 20 SMA, whilst the technical indicators retreat from their mid-lines, increasing the risk of a downward breakout. In the 4 hours chart, the index is now well below its moving averages, while the technical indicators have turned higher within bearish territory, rather reflecting the latest bounce than suggesting an upcoming recovery. 

Support levels: 17,460 17,396 17,325

Resistance levels: 17,588 17,642 17,710

FTSE 100

The FTSE 100 managed to close higher, up 0.27% or 16 points at 6,167.77. The Footsie reached its highest in two weeks in intraday trading, underpinned by crude oil prices, up to fresh 2016 highs. The benchmark however, trimmed most of its daily gains ahead of the close, as UK inflation missed expectations, confirming the softer UK economic outlook. Among stocks, mining-related equities led the advance, with Glencore up 2.17% and BHP Billiton advancing 2.55%. The index fell some 30 points in after hours trading, and the daily chart shows that it pared gains right below a bearish 20 SMA, a strong dynamic resistance now around 6,225, while the technical indicators have turned slightly lower within bearish territory, with no actual strength. In the 4 hours chart, the index is now around a horizontal 20 SMA, while the technical indicators diverge from each other within neutral territory, failing to offer clear clues on what's next for the benchmark. The downside potential will be firmer on a break below 6,056, as the index has bounced from the level multiple times ever since the month started. 

Support levels: 6,102 6,056 6,006 

Resistance levels: 6,178 6,225 6,301

DAX

The German DAX came back from a long holiday with a loss, down 62 points to 9,890.19 this Tuesday, giving back its early gains, weighed by a strong slide in the car makers sector. BMW fell 3.0%, while Volkswagen shed 2.67% and Daimler closed 1.84% lower. There were no major corporate news, albeit United Internet led advancers, up 5.15% after affirming its full-year outlook. The daily chart shows that the index is near Friday's close, still barely holding above a bearish 100 DMA, and with selling interest surging on approaches to a bearish 20 SMA, whilst the technical indicators remain within bearish territory, with modest bearish slopes. In the 4 hours chart, the downside is favored, particularly on a downward extension below 9,752, as the index remains below all of its moving averages, while the technical indicators head slightly south below their mid-lines. 

Support levels: 9,752 9,680  9,617

Resistance levels: 9,862 9,924 10,005 

Nikkei

Asian shares closed sharply higher, with the Japanese Nikkei adding 188 points or 1.13% to close at 16,652.80, underpinned by Wall Street's Monday gains and an overall positive sentiment among investors. Also,  a continued advance in oil prices backed the recovery of the index that anyway fell in after-hours trading, as Wall Street plummeted. Now poised to open the day around 16,530, the daily chart shows that the intraday recovery stalled when it reached a strongly bearish 100 DMA, and is now developing also below its 20 SMA, whilst the Momentum indicator holds flat within negative territory and the RSI remains in neutral territory, maintaining the risk towards the downside. In the shorter term, the 4 hours chart the benchmark also presents a neutral stance, with the index now stuck within its moving averages, all together in a tight range, and the technical indicators heading nowhere  around their mid-lines. 

Support levels: 16,504 16,447 16.339

Resistance levels: 16,605 16,697 16,780 

Gold

Spot gold swung between gains and losses for most of this Tuesday, following the erratic behavior of the USD, to finally end up around  $ 1,278.00 a troy ounce, fueled by a late slide in the greenback and Wall Street´s fall.  Despite the positive close, the daily chart shows that the bright metal posted a lower low and a lower high, while it is still capped by the roof of the descendant channel coming from  this year high of 1,303.67, which increases the risk of a bearish move over the upcoming days. In the same chart, the technical indicators lack directional strength within neutral territory, while the price keeps holding above a bullish 20 SMA, which ultimately limits the possibility of a stronger decline. In the 4 hours chart, the technical indicators also present a neutral stance, heading nowhere within positive territory, whilst the price develops above its 20 and 100 SMAs, in line with the longer term outlook.

Support levels: 1,274.10 1,265.60 1,256.80 

Resistance levels: 1,282.20 1,288.70 1,295.50

WTI Crude Oil

Crude oil prices advanced to fresh 2016 highs, with West Texas Intermediate crude oil futures posting a fresh 7-month high of $48.54 a barrel, as concerns over the supply glut continued to wane. Output disruptions in Canada and Nigeria are helping to rebalance the market, at least temporarily, while comments from Goldman Sachs, pointing to a strong recovery in demand during the second half of the year, spurred markets' optimism. Trading a few cents below the mentioned high, the overall bullish trend prevails as in the daily chart, the technical indicators keep heading higher within positive territory, whilst the price is well above a bullish 20 SMA, now around 45.30. In the shorter term, the 4 hours chart shows that the upward strength is limited at this point, as the technical indicators have turned flat around overbought levels, but the price is also above a strongly bullish 20 SMA, supporting a continued advance for this Wednesday. 

Support levels: 48.10 47.50 46.70  

Resistance levels: 48.60 49.20 50.00