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The American dollar rallied for most of this Tuesday

4th January 2017

EUR/USD

The American dollar rallied for most of this Tuesday, extending its gains against the common currency to its highest in 14-years. The EUR/USD pair sunk to 1.0340 following the release of much better-than-expected US data that fueled confidence in the world's largest economy. According to official releases, . US construction spending surged to its highest in 10 years increasing by 0.9% in November to  $1.18 trillion, while the ISM Manufacturing PMI expanded in December at the fastest pace in two years, up to 54.7 from 53.2 a month earlier. The final Markit Manufacturing PMI for the same month, suffered a modest upward revision, printing 54.3 from an initial estimate of 54.2. 

Earlier in the day, German's macroeconomic figures also surprised to the upside, although the EUR failed to benefit from the data, as the number of people out of work fell by a seasonally adjusted 17,000 in December, against an expected decline of 5,000, maintaining the unemployment rate at 6%. Also, preliminary inflation in the same month, came in better-than-expected, up by 0.7% when compared to November, and by 1.7% compared to December 2015.

Dollar's rally however, was quickly reverted in the US afternoon, with no certain catalyst behind the move, resulting in the EUR/USD pair ending the day around 1.0415, still in the red for the day. Technically, the 4 hours chart for the pair shows that technical indicators have bounced from near oversold territory, but remain well below their mid-lines, and below previous daily highs, whilst the price remains well below its moving averages, indicating that chances of additional gains are limited. Furthermore, and in the mentioned chart, the 20 and 100 SMAs converge around 1.0490, providing a strong dynamic resistance in the case of further recoveries. Despite the latest bounce, the pair is down for a third consecutive day, with lower lows and lower highs in the daily chart indicating that the bearish trend remains firm in place.

Support levels: 1.0380 1.0340 1.0300 

Resistance levels: 1.0445 1.0490 1.0530

USD/JPY

Dollar's momentum, triggered by rising stocks and better-than-expected US data, resulted in the USD/JPY pair advancing up to 118.60, where the pair also topped last December. The rally, however, was quickly reverted mid US session, with the pair plummeting to 117.21, its lowest for the day and settling a few pips above this last ahead of the Asian opening. The dollar index rallied to its highest in almost 15 years this Tuesday, printing 103.76 before turning sharply lower and closing the day around 103.00, with the JPY replicating DXY's moves. Japanese banks will be opening for the first time this week, following a long year-end holiday, bringing alongside the release of local manufacturing and services PMIs. In the meantime, the pair has formed a double top in the mentioned 118.30, with the neckline at 116.04, the low set last December 29th. A break below this last should lead to a fall down to the 114.00 region, this last a major static support as its stands for the 23.6% retracement of the 2011/15 rally. In the 4 hours chart, the price has pulled back to the daily descendant trend line broken earlier in the day, whilst technical indicators turned sharply lower, but hold within positive territory, as a break below 117.00 is required to confirm additional declines. In this last chart, the 100 SMA keeps heading higher at 116.60, providing a dynamic intraday support. 

Support levels: 117.00 116.60 116.20 

Resistance levels: 117.55 117.90 118.30

GBP/USD

Despite confined to tight intraday ranges, the  GBP/USD pair edged lower for a second consecutive day, falling to 1.2199, level last seen late October before bouncing back on dollar's retracement. Hurting the Pound, were news that British ambassador to the EU Sir Ivan Rogers unexpectedly quit, on rumored tensions with Downing Street, after he warned the Brexit could take more than just two years and that a soft Brexit is pretty much impossible. In the macroeconomic front, UK's December Markit Manufacturing PMI came in at 56.1 from an upwardly revised 53.6 in November. The pair has bottomed at 1.2200 last December, and today's bounce from the region makes of it a more relevant technical support, ahead of Wednesday's UK data that include lending and money figures, the construction PMI and latest mortgage approvals. Technically, the 4 hours chart shows that the price is still below its 20 SMA, while technical indicators have lost their bearish strength, but remain below their mid-lines, indicating a limited upward potential. The pair advanced up to 1.2306 at the beginning of the day, being steadily rejected by selling interest aligned around the 1.2300 threshold. A stronger resistance, however, stands at 1.2330, and renewed buying interest above it will likely result in a retest of last week high of 1.2387. A bearish acceleration below the 1.2200 figure on the other hand, should favor a downward extension towards 1.2088, October 25th daily low. 

Support levels: 1.2200 1.2170 1.2130

Resistance levels: 1.2290 1.2330 1.2385 

AUD/USD

The AUD/USD pair posed a solid advance this Tuesday, rising up to 0.7240 and closing the day barely below this last. During the past Asian session, better-than-expected Chinese data pushed the Aussie higher, as China's Caixin manufacturing PMI for December, resulted at 51.9, beating expectations of 50.7 and previous 50.9, improving at its fastest pace in three years. Data coming from Australia showed that house prices rose by the most in seven years during 2016, amid record low interest rates in the country, up by 10.9% in the year, whilst the AIG Performance of Manufacturing index for December came in at 55.4, above November's 54.2. Dollar's demand following London's opening sent the pair lower, although the strong momentum in equities and base metals maintained the downside limited. With no data coming from the antipodean country this Wednesday, the technical picture for the pair presents a limited upward potential as the price is above a bullish 20 SMA in the 4 hours chart, now converging with a major Fibonacci resistance at 0.7210, but technical indicators lack upward momentum aiming modestly higher around their mid-lines. The pair has topped in the 0.7240 during these last few weeks, which means that a clear break above it is required to confirm further gains. 

Support: levels: 0.7210 0.7175 0.7145

Resistance levels: 0.7250 0.7290 0.7330

Dow Jones

Wall Street posted a nice recovery this Tuesday, although major indexes closed off their daily highs. The Dow Jones Industrial Average closed the day at 19,881.76, up by 119 points or 0.60% and back en route to 20,000. The Nasdaq Composite added 45 points, to end at 5,429.08, whilst the S&P added 0.85%, to 2,257.83. Strong manufacturing data worldwide, alongside with advances in commodities' prices were behind US stocks' rally, as investors regained their optimism over economic improvement for this 2017. Within the Dow, Nike was the best performer, up by 2.22%, followed by Verizon Communications hat gained 2.10%. Only 4 components closed in the red. In the daily chart, the index has settled right below a bullish 20 DMA, while technical indicators hover around their mid-lines, lacking upward momentum at the time being. In the shorter term and according to the 4 hours chart, the upward potential is limited, as the index is trading between its 20 and 100 SMAs, with the largest capping the upside around 19,860, whilst technical indicators bounced from their mid-lines, but remain below previous weekly highs. 

Support levels: 19,878 19,715 19,688    

Resistance levels: 19,860 19,910 19,976

FTSE 100

The FTSE 100 notched an all-time record close this Tuesday, ending the day at 7,177.89, up by 35 points or 0.49%. The index traded as high as 7,213 intraday, lifter by miners after Chinese manufacturing PMI came in much better-than-expected. Pound weakness, alongside with strong UK manufacturing figures, maintained the benchmark afloat in after-hours trading. Among the best performers were Fresnillo that gained 3.69% and Glencore that added 2.90%. Banks also advanced, with Lloyds Banking Group ending the day 2.93% higher. The Footsie holds firm ahead of the Asian opening, and the daily chart shows that the index continued advancing well above its moving averages, whilst the RSI indicator heads north around 73, supporting further gains ahead. In the 4 hours chart, a bullish 20 SMA accelerated its advance far below the current level, whilst technical indicators turned flat, with the Momentum well above its 100 level and the RSI around 78. 

Support levels: 7,169 7,118 7,089 

Resistance levels: 7,190 7,225 7,260

DAX

European equities opened with a strong footing, but closed mixed and not far from their previous closes, with the German DAX finishing the day at 11,584.24, down by 14 points or 0.12%. The index traded as high as 11,650, its highest since August 2015 early Europe, underpinned by strong local data showing that inflation continues advancing towards 2%, while unemployment fell below expected. Banks and automakers led the advance, with Commerzbank leading winners' list by adding 3.15% followed by Volkswagen, up by 2.08%. Retailers lagged across the region, weak ahead of trading updates. Daily basis, the Momentum indicator has pulled lower after a modest advance, but the RSI maintains its upward potential within overbought territory as the 20 DMA keeps advancing below the current level, limiting chances of a bearish extension. In the 4 hours chart, the consolidative phase persists, with the index holding above a horizontal 20 SMA, the Momentum indicator heading nowhere around 100 and the RSI indicator turning modestly higher around 68, in line with the longer term perspective.  

Support levels: 11,569 11,512 11,458

Resistance levels: 11,623 11,689 11,743

Nikkei

The Nikkei 225 will finally come back from a long lasting year holiday this Wednesday, although there was some activity in futures trading as the rest of the world operated normally. Having closed at 19,114.37, the benchmark now stands around 19,237 ahead of the Asian opening having traded as high as 19,422 intraday. The index gapped lower alongside with European equities, retreating afterwards as Wall Street moved off its daily highs. Technically, the daily chart shows that the Nikkei remains below a bullish 20 DMA currently at 19,298, whilst technical indicators continue lacking directional strength within neutral territory, suggesting that the index needs to settle above the 19,300 level to be able to advance further. In the 4 hours chart, the index managed to settle above an anyway bearish 20 SMA, whilst technical indicators have turned flat within positive territory after retreating from their daily highs. 

Support levels: 19,192 19,132 19,047 

Resistance levels: 19,300 19,365 19,422

Gold

Gold prices advanced to fresh 3-week highs, with spot settling at $1,159.50 a troy ounce after trading as high as 1,163.00. Gold gained at the beginning of the day, suffering a temporal setback after the DXY traded near 103.80, its highest in 14 years, but recovered ahead of the daily close as the dollar index retreated. Political woes worldwide have helped the metal bouncing late December, although hopes for three rate hikes in the US for this year dented the upward potential. The daily chart favors additional advances, as an early decline was contained by the 20 DMA, whilst technical indicators maintain their bullish slopes within positive territory, now at fresh 2-month highs. Still, the commodity needs to recover beyond 1,173.10, the 23.6% retracement of its latest decline to confirm further gains and an interim bottom. In the 4 hours chart, technical indicators have bounced from their mid-lines, maintaining their upward strength, whilst the price is developing now above a bullish 20 SMA, having met buyin
g interest earlier in the day on a test of the 100 SMA.

Support levels: 1,153.50 1,145.60 1,136.45    

Resistance levels: 1,164.00 1,173.10 1,182.90

WTI Crude Oil

West Texas Intermediate crude oil futures surged around 2.35% intraday to trade at $55.22 a barrel, but suffered a sudden u-turn mid American session, plummeting to 52.11 its lowest in over a week, ending the day a few cents above this last. The commodity initially fell as the dollar index surged to its highest in fourteen years, but was unable to recover, despite the index retreated, weighed by news coming from Libya, as the OPEC country, which was exempted from cutting output, has increased its production by 85,000 barrels per day and plans to ship nearly 1.9 million barrels this month. From a technical point of view, the risk has turned towards the downside, given that in the daily chart, the price has broken below its 20 DMA, whilst technical indicators are currently entering bearish territory. Still the 52.00 region has proved being a major static support and a clear break below the level is required  to confirm additional declines. Shorter term, and according to the 4 hours chart,  the risk is also towards the downside, as the price broke below its 20 and 100 SMAs, whilst technical indicators hold near oversold territory ahead of the Asian opening. 

Support levels: 51.90 51.40 50.65    

Resistance levels: 52.80 53.50 54.20

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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.