Dollar's strength continued dominating the FX board on Wednesday

EUR/USD

Dollar's strength continued dominating the FX board on Wednesday, as the dollar index rose to its highest level in four months on Tuesday, supporting also stocks' rallies. The EUR/USD pair fell down to 1.0981 early Europe, in spite better-than-expected PPI readings for June in Germany, down yearly basis by 2.2%, but up from the previous month by 0.4%. The macroeconomic calendar was quite scarce, adding to the lack of motivation among investors, with attention in the upcoming European Central Bank meeting this Thursday. There's a general sense that Draghi may hint more easing ahead, but little action is expected this month, as the ECB is still implementing the measures announced last March.

The negative tone persists in the EUR/USD pair, although the 1.1000 level has become a tough bone to break, with the pair having struggled around it for most of the American session. Technically, the  4 hours chart shows that the price is below a bearish 20 SMA, offering now a dynamic resistance around 1.1040, while the technical indicators remain within negative territory although with limited downward strength. The pair needs to break below the 10960 level to be able to extend its decline down to 1.0910, the post-Brexit low, en route to a major static support area, between 1.0800 and 1.0840.

Support levels:  1.0960 1.0910 1.0840

Resistance levels: 1.1050 1.1080 1.1120 

USD/JPY

The USD/JPY extended its rally to fresh 6-week highs, standing by the end of the day a few pips above 106.80, the pre-Brexit high. The advance accelerated in the US afternoon, as Wall Street reached fresh record highs, although the lack of volume resulted in moderate gains for both, stocks and the pair. The USD/JPY pair is biased higher in the short term, as in the 1 hour chart, the price continues advancing above its 100 and 200 SMAs, which maintain bullish slopes. Technical indicators in the mentioned time frame have turned modestly lower from near overbought readings, but are far from suggesting a downward move ahead. In the 4 hours chart, the 100 SMA continues advancing below the 200 SMA, while the technical indicators remain well above their mid-lines, but with no upward strength. Nevertheless, the upside remains favored, with scope to test the 100 DMA, during the upcoming sessions, now at 107.50.

Support levels:  106.40 105.95 105.50 

Resistance levels: 107.15 107.50 107.90

GBP/USD

The Sterling outperformed its peers, advancing against most of its major rivals on the back of strong employment data. The GBP/USD pair rallied up to 1.3197 following news that the UK added 176,000 new jobs between March and May, well above previous month's reading of 55K. The unemployment rate fell to 4.9%, with the only disappointment coming from wages, up by 2.2% excluding bonus, below the 2.3% previous. Although data was quite strong, the numbers are of a pre-Brexit scenario, which means data will be hardly used by the BOE to decide during their next meeting. The UK will release its June Retail Sales this Thursday, expected to have plummeted ahead of the Brexit vote. The pair retreated from the mentioned high, but remains above the 1.3130 level, and the 4 hours chart shows that the price was unable to advance beyond a modestly bearish 20 SMA, while the technical indicators remain within bearish territory, with the RSI indicator heading modestly lower around 47, all of which maintains the risk towards the downside. 

Support levels: 1.3130 1.3065 1.3020

Resistance levels: 1.3200 1.3250 1.3300

AUD/USD

The Australian dollar extended its losses down to 0.7461 against its American rival, still weighed by speculation that the RBA will deliver a rate cut in the upcoming weeks. After topping around 0.7679 last Friday, the AUD/USD pair entered a selling spiral that accelerated after the dovish Minutes offered by the Australian Central Bank. Technically, however, the pair still needs to break a major static support, the 38.2% retracement of this year rally at 0.7450, to confirm a steeper decline ahead. Technical readings in the 4 hours chart point to a downward extension, as the price is currently below its 200 EMA for the first time in this July, while the 20 SMA has turned sharply lower far above the current level. Indicators in the mentioned time frame have resumed their declines within negative territory after correcting oversold readings, also indicating that the risk is towards the downside. If the mentioned Fibonacci support gives up, the pair has room to extend its decline down to 0.7330, the 50% retracement of the same yearly rally. 

Support levels: 0.7450 0.7410 0.7370  

Resistance levels: 0.7520 0.7560 0.7600 

Dow Jones

Wall Street continued advancing this Wednesday, with the DJIA adding 36 points or 0.19% to close at 18,595.03 a new record high The Nasdaq Composite and the S&P recovered the ground lost of Tuesday and advanced further, with the first adding 1.06% and ending the day at 5,089.93, and the second advancing 9 points to 2,173.02. The technology sector led the advance, on better-than-expected earnings report, with Microsoft up by 5.3% after reporting a revenue of $22.6 billion and a per-share profit of $0.69. Technically, the daily chart for the DJIA shows that the Momentum indicator has turned flat within positive territory, while the RSI indicator continues aiming north around 71, indicating further gains are likely during the upcoming sessions. In the 4 hours chart, however, technical readings maintain a neutral-to-bullish tone, flat within positive territory, and with the 20 SMA heading modestly higher below the current level. 

Support levels: 18,557 18,499 18,431 

Resistance levels: 18,640 16,695 17,740

FTSE 100

The FTSE 100 added 31 points or 0.47% to end the day at 6,728.99, settling above the 6,700 mark for the first time in this 2016, underpinned by a strong job's report. The mining-related sector, however, closed in the red on poor earnings reports. Anglo American fell 4.82% after a mixed second-quarter production report, showing an increase in iron ore and coal output, but a decline in diamond and cooper tallies. BH Billiton closed down 2.33% after reporting that it produced less iron ore than anticipated during the past year. The Footsie retreated modestly in electronic trading, but remains above the 6,700 mark, and in the daily chart, its holding well above its moving averages, while the RSI indicator keeps consolidating near overbought territory, although the Momentum indicator extended its decline within bullish territory, drawing a bearish diverge that still needs to be confirmed. In the 4 hours chart, and due to the limited intraday range, the neutral tone persists, with the index barely above a horizontal 20 SMA and the technical indicators turning modestly lower within neutral territory. 

Support levels: 6,668 6,615 6,561 

Resistance levels: 6,720 6,755 6,806

DAX

European equities surged this Wednesday, supported by strong UK employment data which spooked fears of an economic slowdown.  The German DAX closed the day at 10,142.01, up by 1.61% with Volkswagen up by 6.06% after the company reported its first-half earnings exceeded estimates.  Also up, was the software giant SAP,  after reporting better-than-expected quarterly operating profit and affirming its full-year guidance, closing the day 5.24% higher. The daily chart shows that the index is back above its 200 DMA, while the RSI indicator has turned higher, now at fresh highs around 58, while the Momentum indicator pared its decline and is now flat. Still the index remains within the bearish channel that leads it since mid April, with the roof now currently around 10,280. In the 4 hours chart, the 20 SMA keeps heading higher below the current level, but the technical indicators continue lacking directional strength, consolidating within positive territory. 

Support levels: 10,069 10,010 9,943

Resistance levels: 10,159 10,217 10,280

Nikkei

The Nikkei 225 turned south this Wednesday, down 0.25% or 41 points to close at 16,681.89, Nintendo was among the biggest losers, down by 12.6% after Pokemon Go's launch was delayed in Japan. Also on the negative side were mining related stocks, as metals fell on dollar's strength. Nevertheless, the index rallied in after-hours trading, following European and American indexes in their way up, pointing to start the day around 16,860, its highest since early June. Technically, the daily chart presents a strong bullish tone, as the RSI indicator has extended to fresh highs around 62, while the Momentum indicator also turned higher within positive territory. Also, buying interest seems to be strong on dips towards the 100 DMA, currently around 16,444, the level to break to deny an upward continuation. In the 4 hours chart, the index is well above a bullish 20 SMA, whilst the technical indicators lack upward strength, but remain within positive territory, limiting chances of a bearish move.

Support levels: 16,787 16,707 16,663 

Resistance levels: 16,855 16,930 17,010

Gold

Spot gold fell down to $1,313.58 a troy ounce on broad dollar's strength, as the DYX rose to its highest since March 10, on the back of a string of upbeat US data. The commodity has spent the past few days oscillating within a narrow trading range right below a major Fibonacci resistance, finally breaking lower in the London session, suggesting the downward corrective move could extend during the upcoming sessions. In the daily chart, the price is nearing the 38.2% retracement of its latest bullish run at 1,308.00, while moving further below its 20 SMA, as the technical indicators head sharply lower within negative territory, all of which supports a downward extension. In the shorter term, and according to the 4 hours chart, the metal is also biased lower, with the 20 SMA maintaining its bearish slope around 1.327.45, the Momentum indicator heading south below its 100 level and the RSI indicator consolidating in oversold territory. 

Support levels: 1,308.00 1,299.45 1,287.30

Resistance levels: 1,320.10 1.327.45 1,335.15

WTI Crude Oil

Crude oil prices started the day with a negative footing, with West Texas Intermediate futures plummeting to $44.54 a barrel as the dollar kept strengthening. The commodity, however, trimmed losses after the release of the EIA weekly report, showing that US stockpiles fell by 2.3 million barrels to a total of 519.5 million barrels in the week ending  July 15th. Late Tuesday, the American Petroleum Institute reported a similar draw-down. On a negative note, the EIA report also showed a large increase in gasoline stocks, up by 911K barrels. US light, sweet crude settled above $45.00 a barrel, flat daily basis, still stuck around its 100 DMA. The 20 DMA continues capping the upside around 46.75, while the technical indicators remain flat within negative territory, all of which should keep the upside limited. In the 4 hours chart, the price is still developing below a flat 20 SMA, while the technical indicators have turned modestly higher, but stand within neutral territory, indicating a limited upward potential. 

Support levels: 45.10 44.40 43.70

Resistance levels: 46.20 46.75  47.50