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The greenback remains directionless near-term

1st March 2017

EUR/USD

The greenback remains directionless near-term,  closing the day in an uneven fashion across the board. The Japanese yen is the strongest, with investors seeking for safety ahead of Trump, while the Pound remains the weaker, amid self Brexit woes. The EUR/USD pair advanced for a second consecutive day, but remains contained by selling interest in the 1.0630 region, which caps the upside ever since last week.  The lack of certain directional strength is being exacerbated by the long awaited speech of US President Trump before the Congress, as he is expected to unveil some of its plans. He already anticipated some during an interview with FOX, mentioning his will to increase military spending, replace Obamacare and tighten borders in an interview this Tuesday, but has not mentioned the "phenomenal" tax reformed he announced a couple of weeks ago. 

The dollar came under selling pressure this Tuesday after the release of mixed macroeconomic reports, with attention centered in slowing growth by the end of 2016. The second estimate of US Q4 GDP came in at 1.9%, matching the advanced reading, but below the 2.1% expected. Also, the price index for personal consumption expenditures was down to 1.9% from previous 2.2%, in the same quarter. January trade balance showed a deficit of $69.2B, yet on a positive note, the CB consumer confidence index rose in February to 114.8 from 111.6 in January. Still, chances of a FED's March rate hike keep surging, after FED's Kaplan said that rates should raise "sooner rather than later," limiting dollar's losses.   

From a technical point of view, the price has pulled back to the daily descendant trend line broken on Monday and recovered, somehow suggesting that selling interest eased during the last 24 hours. In the 4 hours chart,  the price has bounced from an advancing 20 SMA, and is currently above a modestly bearish 100 SMA, whilst the Momentum indicator heads north within positive territory, and the RSI consolidates around 60, supporting some further gains on a break beyond 1.0660 that can extend up to the 1.0700/20 region. Upcoming direction will depend solely on how the market digests Trump's speech, with cautious recommended on dollar weakness, as the common currency is still undermined by local political woes. 

Support levels: 1.0590 1.0565 1.0520

Resistance levels: 1.0635 1.0660 1.0710

USD/JPY

The USD/JPY pair plunged to 111.68 during the US afternoon, tracking the decline in Wall Street, as US indexes came under selling pressure after posting multiple record highs in-a-row, ahead of Trump. The pair managed to bounce from the level, as stocks bounced some ahead of the close, but mostly because of a technical support, as February's previous declines stalled in the 111.60 region. The yen strengthened also on the back of soft US growth figures, as the second estimate of Q4 GDP missed expectations of 2.1%, printing 1.9%. During the past Asian session, Japan released its January Industrial Production figures, which came in at -0.8% against an advance of 0.3% expected. Retail Sales in the same month, rose 0.5% compared to December, and by 1.0% yearly basis, overall soft readings that reflect the poor performance of the local economy. The pair hovers around 112.00 ahead of the Asian opening, with technical indicators in the 4 hour chart bouncing modestly within bearish territory, and the price far below the 100 and 200 SMAs, favoring a bearish acceleration on a break below 111.60, which could extend down to 110.00. 

Support levels: 112.50 111.95 111.60

Resistance levels: 113.05 113.45 113.90

GBP/USD

The British Pound maintained the sour tone this Tuesday, falling against all of its major rivals and with the GBP/USD pair ending the day a few pips above 1.2400, undermined by speculation about a  possible Scottish independence referendum. Scottish PM Nicola Sturgeon added fuel to the fire after saying that at this point, the independence vote is more like a necessity and criticized PM May for her lack of compromise on Brexit.  The House of Lords keeps debating the Brexit bill, and seems no final decision will be taken this Wednesday, as today, the House is expected to vote on an amendment to guarantee the rights of EU citizens living in the UK, but will discuss next week the possibility of the Parliament to have a final vote on the Brexit deal. Technically, the pair traded within Monday's range, meeting selling interest around a bearish 20 DMA for a second consecutive day, rather suggesting that buyers are rushing to take profits on advances than suggesting increasing selling interest. For the upcoming sessions, the 4 hours chart shows that the risk is towards the downside, given that the pair has been unable to recover beyond a still flat 200 EMA, and a modestly bearish 20 SMA, whilst technical indicators remain within bearish territory, with no certain directional strength. The pair has an immediate support at 1.2380, where buying interest has been surging during the last two weeks, although a more relevant support comes at 1.2345, February low and the 50% retracement of its latest bullish run. To the upside, gains are unlikely to extend beyond the 1.2530/50 region, where strong selling interest contained rallies pretty much since February started. 

Support levels:  1.2380 1.2345 1.2300

Resistance levels: 1.2480 1.2530 1.2565

AUD/USD

The Australian dollar continues to trade flat against the greenback, with the pair closing the day flat around 0.7670 for a second consecutive day. The Aussie gathered support early Tuesday from a better-than-expected current account report for Q4, as the deficit narrowed from 10.2B to 3.9B.  February New Home sales fell by 2.2% in January from a 0.2% advance in December, but given RBA's concerns over a housing bubble, the negative reading takes some steam off, rather than indicating economic slowdown. From a technical point of view, the pair has made no progress, ending the month as it started in a well-limited range. The upward potential seems limited since the week started, as in the 4 hours chart, the pair keeps meeting selling interest around a modestly bearish 20 SMA, whilst technical indicators failed to surpass their mid-lines, and turned lower, although above previous lows. The pair has been steadily bouncing from the 0.7660 region, now the immediate support, although it would take a clear extension below 0.7600 to confirm a steady decline for the upcoming sessions. 

Support levels: 0.7660 0.7620 0.7570

Resistance levels: 0.7710 0.7740 0.7770 

Dow Jones

The Dow Jones Industrial Average ended its record-winning streak, losing roughly 25 points this Tuesday, to close at 20,812.51. The Nasdaq Composite lost 36 points and settled at 5,825.44, while the S&P ended at 2,363.64, down by 0.26% or 6 points. US equities plummeted at the opening, but managed to trim most of their losses ahead of the close, undermined at the beginning of the day by a worse-than-expected GDP revision. Among the Dow, Coca Cola was the best performer, up 0.77%, followed by Chevron that added 0.69%. Wall-Mart led decliners, down 1.18% whilst Nike followed, ending the day 1.07% lower. The daily technical picture for the DJIA shows that the benchmark remains at record highs and far above bullish moving averages, while the RSI keeps consolidating around 82 and the Momentum indicator has turned flat after correcting overbought readings, with no signs that the index could decline further. Shorter term and according to the 4 hour chart, the index managed to close the day a few points above the 20 SMA, while technical indicators are attempting to recover after a pullback within positive territory, in line with the longer term perspective. 

Support levels: 20,779 20,724 20,668

Resistance levels: 20,855 20,900 20.940

FTSE 100

The FTSE 100 advanced 10 points to close February at 7,263.44, up 2.3% on the month, and not far from record highs posted last January at 7,354. The index managed to post daily gains, despite miners edged lower, following price retracements in base metals. Babcock International Group, led advancers, closing the day 7.24% higher, followed by Croda International, up by 5.98%, boosted by hopes that US President Trump will make a big announcement on infrastructure investment. On the losing side, BHP Billiton ended 2.11% lower, Randgold Resources shed 1.835, while Glencore shed 1.66%. The index has made little progress from the technical point of view, as the daily chart shows that it held above its 20 SMA, although technical indicators keep losing upward strength within positive territory. In the 4 hours chart, the index keeps struggling around a bearish 20 SMA, but above its 100 SMA, whilst technical indicators are stuck around their mid-lines, lacking clues on what's next for the index.

Support levels: 7,238 7,195 7,160 

Resistance levels: 7,285 7,315 7,342

DAX

European equities posted modest gains this Tuesday, with the German DAX adding 11 points or 0.10% to end at 11,834.41, with market's sentiment neutral ahead of US releases and President Trump speech before the Congress. Financials recovered ground, with Deutsche and Commerzbank adding 0.62% and 0.56% respectively, although the best performer was ProSiebenSat.1 Media, up 1.01%. Infineon Technologies led declines, down 1.21%. The daily chart for the index shows that an early decline was again contained by buying interest around a modestly bullish 20 DMA, while technical indicators lack directional strength within positive territory, indicating a limited downward potential as long as the benchmark holds above Friday's low of 11,721. In the 4 hours chart, however, the index is below a now bearish 20 SMA, whilst technical indicators hold within negative territory, and particularly the RSI is gaining downward strength, around 45, increasing chances of further slides for this Wednesday.

Support levels: 11,781 11,721 11,669 

Resistance levels: 11,865 11,902 11,945 

Nikkei

The Nikkei posted a modest advance this Tuesday, closing the day at 19,118.99,  up by 11 points or 0.06%, finding support on dollar's advance against the Japanese yen, but with investors in cautious mode ahead of Trump. Export-oriented equities closed higher, with modest gains in automakers and electronics. The best performer was IHI Corp, up 3.55%. Toshiba led losers' list, ending the day 3.52% lower, followed by Nissan Chemical, down by 2.03% and Takeda Pharmaceutical that shed 1.93%. The index hovers around 19,100 ahead of Wednesday's opening, having extended its slide in after-hours trading to 19,026 as the JPY plunged below 112.00, but the benchmark bounced back alongside with the USD/JPY pair. Technically, the daily chart presents a neutral-to-bearish stance, given that technical indicators have accelerated their declines within negative territory, while intraday attempts to advance were contained by a flat 20 DMA. In the 4 hours chart, the index is below all of its moving averages, with the 20 SMA crossing below the largest ones with a sharp bearish slope, indicating further slides ahead. Technical indicators in this last time frame, have bounced within negative territory, but stalled their recoveries right below their mid-lines, indicating a limited upward scope for the upcoming sessions. 

Support levels: 19,080 19,026 18,984

Resistance levels: 19.165 19,229 19,277 

Gold

Gold prices fell, despite risk aversion remained high ahead of Trump's  budget speech before a joint session at the Congress.  The commodity was partially weighed by increasing odds for a US rate hike in March, following comments from Dallas FED President Rob Kaplan, who stated that the Central Bank should move "sooner rather than later,"  when it comes to rates. Several FED speakers, including Yellen, will speak this Friday, and may offer some clearer clues on what's next for rates. Spot gold settled around $1,250.00 a troy ounce, and the daily chart shows that the price failed once again to surpass its 200 DMA, but holds around a key Fibonacci level, and above a bullish 20 DMA. The Momentum indicator in the mentioned time frame stands directionless within positive territory, while the RSI indicator barely retreats from overbought readings, now at 66. In the 4 hours chart, the price has broken below its 20 SMA that losses upward strength, while technical indicators head sharply lower, with the RSI indicator currently at 51, not enough to confirm additional declines. A break below the daily low of 1,247.65 is what it takes to confirm a new leg lower towards 1,300. 

Support levels: 1,247.65 1,238.90 1,230.00 

Resistance levels: 1,255.25 1,263.80 1.273.20 

WTI Crude Oil

West Texas Intermediate crude oil prices fell to a fresh 2-week low of $53.18 a barrel this Tuesday, on renewed concerns about US rising production. Ahead of the release of US stockpiles data, crude inventories are expected to have risen by 2.9 million barrels last week. The commodity bounced back in the US afternoon, to close the day a few cents below 54.00, helped by a Reuters survey, indicating that OPEC's members have achieved 94% of their pledged output cut in February, after cutting roughly 80% in January. The commodity is ending the month modestly higher, although having remained contained within January's range. The daily chart retains the neutral stance seen on previous updates, although the downward potential increases, as technical indicators turned south, although still within neutral territory, whilst the commodity remains above a horizontal 20 DMA. In the 4 hours chart, the late recovery stalled below a modestly bearish 20 SMA, whilst technical indicators have bounced within bearish territory, limiting chances of a short term decline. 

Support levels: 53.40 53.00 52.50

Resistance levels: 54.75 55.30 56.00

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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.