The EUR/USD pair extended its recovery up to 1.0685

EUR/USD

The EUR/USD pair extended its recovery up to 1.0685, the highest since November 17th, with the dollar weighed by retreating bond yields and falling equities. The pair, however, changed course mid European session, falling sub 1.0600 ahead of Wall Street's opening, and spending most of the American session consolidating below the critical mark.

In the EU, the release of October monetary figures which showed a slowdown in the rate of annual M3 money supply growth to 4.4% in the year to October from an upwardly revised 5.1% in September, which is not good news for ECB's aim to boost local inflation. This Tuesday however, sentiment indexes for EU business and US GDP and personal consumption data, will probably result in a more lively trading across the board. Also, ECB's Draghi testified before the European Parliament's Committee on Economic and Monetary Affairs, but added little new to what the market already knew, reaffirming that the Central Bank is willing to preserve monetary accommodation, but that they will assets their options in their upcoming December meeting.

The EUR/USD pair technical picture, according to the 4 hours chart shows that the intraday recovery stalled short from the 23.6% retracement of the latest daily decline at 1.0700, still the level to surpass to talk about a more sustainable recovery. The price is back struggling around a modestly bearish 20 SMA and well below the 100 SMA, while technical indicators erased their overbought readings and turned flat around their mid-lines, with the pair now heading into the Asian session with a flat stance. In the longer run, the risk remains towards the downside, with scope to test 1.0460, 2015 low, as long as correction remained contained by 1.0815, the 38.2% retracement of the same slide.

Support levels: 1.0550 1.0505 1.0460

Resistance levels: 1.0610 1.0650 1.0700

USD/JPY

The Japanese yen strengthened against all of its major rivals, resulting in the USD/JPY pair falling down to 111.35 intraday, before recovering some ground to settle around 112.20. Yields on government debt fell across the board, with the US 10-year yield down 5bp at the end of the day, to 2.32%. Adding to yen's strength were falling equities, with most major indexes closing in the red, amid increasing risk aversion, triggered by OPEC's failure to reach a deal and increasing political woes in Europe. Japan is scheduled to release its latest unemployment and retail sales figures during the upcoming Asian session, although the pair will likely keep on trading on sentiment this Tuesday. Technically, the risk is towards the downside intraday, given that in the 1 hour chart, the price is back below its 100 SMA after a short-lived recovery above it, while technical indicators turned sharply lower within positive territory, and are currently crossing their mid-lines towards the downside, supporting some additional declines towards 111.20, the 200 SMA. In the 4 hours chart, technical indicators maintain their sharp bearish slopes within negative territory, while the 100 and 200 SMAs maintain their bullish slopes far below the current level, indicating that in the longer run, the risk remains towards the upside.

Support levels: 112.70 112.30 111.90

Resistance levels: 113.55 114.05 114.40

GBP/USD

The GBP/USD pair was quite volatile this Monday, surging up to 1.2530 at the beginning of the day, to fall down to 1.2384 early in the American session. The pair ended the day a few pips above the 1.2400 level, mid-range of the comfort zone defined during the past Monday, when the pair traded 1.2310 and 1.2520. There were no relevant releases in the UK, but BOE's member Gertjan Vlieghe spoke at the Sheffield University, offered some interesting clues over economic policies, saying that the MPC is not willing to raise rates at the moment, yet at the same time, affirmed that the Bank can only ease a little bit further. He also expressed concerns over a possible inflation overshoot, but said that they remain confident inflation will end up fading on its own. Technically, the short term picture shows that the pair recovered a few pips above the 1.2400 figure, although the risk remains towards the downside, as in the 1 hour chart, technical indicators have lost bearish strength, but remain near oversold readings, while the 20 SMA has turned lower far above the current level, currently around 1.2455. In the 4 hours chart, the price has broken below its 20 SMA and 200 EMA, while technical indicators have turned flat within negative territory, indicating that the downward potential is limited, particularly as the price holds above a daily ascendant trend line coming from 1.2082, October 25th low, currently around 1.2380.

Support levels: 1.2380 1.2335 1.2290

Resistance levels: 1.2440 1.2485 1.2520

AUD/USD

The Australian dollar edged higher against its American counterpart, with the pair advancing up to 0.7493, and ending the day nearby after a pullback to the 0.7450 region. Backing the Aussie was a strong recovery in base metals, with iron ore up 1.5% to a two-year high, and gold posting a modest advance after falling for four days in-a-row. Technically, the pair heads into the Asian opening with a positive tone, as in the 1 hour chart, a bullish 20 SMA is attracting short term buying interest, while technical indicators are recovering modestly from their mid-lines, having erased the overbought conditions reached at the beginning of the day. In the 4 hours chart, the 20 SMA has continued advancing below the current level, while the technical indicators have retreated modestly from overbought readings, but remain well above their mid-lines, limiting chances of a steeper decline. The fact that the pair recovered and held above the 0.7450 level, a strong Fibonacci support, also favors the case of a bearish extension, with scope to extend its recovery up to the 0.7600 region.

Support levels: 0.7450 0.7400 0.7365

Resistance levels: 0.7495 0.7540 0.7580

Dow Jones

US indexes edged lower this Monday, retreating from record highs, with the Dow Jones industrial Average shedding 0.28% or 54 points, to close at 19,097.90, and the Nasdaq Composite down 30 points, to 5,368.81. The S&P shed 11 points, or 0.53%, to 2,201.72, with financials and energy shares seeing the largest declines, following the lead of European equities. Adding to the bearish case, was the absence of fresh US data to back up the latest demand of USD-related assets. The daily chart for the Dow Jones shows that the RSI indicator has retreated within overbought territory, now heading lower around 72, while the Momentum indicators has corrected extreme overbought conditions before turning flat above its 100 line, maintaining the downside limited. In the 4 hours chart, the index presents a neutral stance, hovering around a modestly bullish 20 SMA, while the Momentum indicator lacks directional strength around its 100 level and the RSI indicator turned lower around 55. The daily low was set at 19,066, and a break below it is required to confirm further slides for this Tuesday.

Support levels: 19,066 19,005 18,960

Resistance levels: 19,136 19,180 19,230

FTSE 100

The FTSE 100 ended the day at 6,799.47, down by 41 points or 0.60%, weighed by the sour tone of oil and banking-related shares. The black gold started the day on the back foot, with investors worried over OPEC’s unlikely supply cut meeting this week. Among the worst performers were Royal Bank of Scotland, down by 2.63%, while Royal Dutch Shell shed 1.85%. Mining-related equities, however, topped winners' list, backed by a rally in base metals, with Randgold Resources adding 4.28%, followed by Fresnillo that closed 3.73% higher. The daily chart for the Footsie shows that the index remained capped by its 100 DMA, extending below the level and with technical indicators having turned sharply lower, entering now bearish territory and supporting some additional slides. In the shorter term, the index is also biased lower, as in the 4 hours chart, indicators maintain their downward slopes within negative territory while the benchmark extended its slide below its moving averages.

Support levels: 6,772 6,734 6,693

Resistance levels: 6,815 6,876 6,925

DAX

European equities edged lower this Monday, weighed by a decline in oil prices, with the German DAX down 116 points to close at 10,582.70, a fresh 3-week low. Italy will perform a constitutional referendum this weekend, aimed to reduce the power of the Senate. If the NO wins, Prime Minister Matteo Renzi has said he will resign, which will put further pressure on an already fragile sector. With that in mind, bank-related equities were among the worst performers in the region, and among the DAX there were no exception. Commerzbank led losers, closing 3.32% lower, followed by Deutsche Bank that shed 3.20%. The German index heads into the Asian opening near its daily low of 10,552, and is poised to extend its decline according to the daily chart, given that it broke below its 20 DMA, while technical indicators are entering bearish territory with sharp downward slopes. In the 4 hours chart, the index has fallen below all of its moving averages, while the RSI indicator heads south around 33, supporting a downward extension on a break below the 10,530 region, now the immediate support.

Support levels: 10,530 10,470 10,425

Resistance levels: 10,603 10,647 10,710

Nikkei

The Nikkei 225 closed the day at 18,356.89 down by 23 points or 0.13%, weighed by yen's strength, and an early decline in oil prices. The Japanese benchmark snapped a seven sessions winning streak, but held well above the 18,000 mark, with export-oriented equities retracing some of their latest gains. Big names like Toyota, and Casio, closed lower, while fears that oil producing countries won't be able to reached a deal, also dented market's sentiment. The index fell further in after-hours trading, following Wall Street's slide, but the daily chart shows that the index remains well above a bullish 20 DMA, while technical indicators have barely retreated within overbought territory, with the RSI indicator holding at 71, indicating that, while the Nikkei may correct further lower this Tuesday, bulls are still in the driver's seat. In the shorter term, and according to the 4 hours chart, technical indicators maintain a neutral stance, hovering around their mid-lines, while the index is developing right below a modestly bullish 20 SMA, currently at 18,336, the immediate resistance.

Support levels: 18,237 18,172 18,129

Resistance levels: 18,336 18,377 18,422

Gold

Gold prices recovered some ground this Monday, with spot nearing $1,200.00 a troy ounce during the Asian session, retracing from its high as investors re-ignited dollar buying during the London session, but closing the day higher around $1,192.50 a troy ounce. The base metal rebounded from the multi-month low of 1,170.92 achieved last week, but there's nothing suggesting that the recovery is something more than a correction, after the latest sharp decline. Technically the daily chart shows that technical indicators have recovered from extreme oversold readings, but that the RSI indicator stands around 30, while the Momentum is well below its mid-line, while the price remains well below the 23.6% retracement of its latest daily decline and a sharply bearish 20 SMA, all of which maintains the upside limited in the longer view. In the 4 hours chart, the price is holding a few cents above a still bearish 20 SMA, while technical indicators have lost upward strength within neutral territory, also suggesting the latest upward move was corrective.

Support levels: 1,187.15 1,178.60 1,170.90

Resistance levels: 1,197.55 1,210.60 1,221.43

WTI Crude Oil

Oil prices started the day with a negative tone, with the US benchmark, WTI, falling down to $45.13 a barrel, on fears that the OPEC will be unable to seal a deal on an oil output cap. Dollar's weakness, however, alongside with the upbeat tone of other commodities, pushed price up to 47.63. Nevertheless, headlines released all through the American afternoon showed that there's still no consensus among the organization's members, with Iran and Iraq still discussing their output levels. WTI trimmed half of its daily gains, closing the day a few cents below the 47.00 mark, and the daily char shows that the price recovered above its 100 and 200 SMAs, both heading modestly higher right below the current level, while technical indicators have bounced strongly from their mid--lines, but are still below past week's highs. In the 4 hours chart, however, a bearish 20 SMA caps the upside, while technical indicators have corrected extreme oversold readings before turning flat within bearish territory, limiting chances of a stronger advance.

Support levels: 46.45 45.70 45.10

Resistance levels: 47.65 48.20 48.90