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The American dollar eased against all of its major rivals last Friday

6th March 2017

EUR/USD

The American dollar eased against all of its major rivals last Friday, as  investors rushed to take profits out of the table after the greenback's sustained rally. The movement was sort of a "buy the rumor, sell the fact" one, as Fed's chief Yellen added her words to the hawkish rhetoric to the one heard all through the week, saying that the Central Bank is ready to pull the trigger this March when speaking about the US economic outlook at the Executives Club of Chicago. The common currency was backed by news coming from France, after far-right leader Marine Le Pen was summoned by a judge Friday over allegations of misusing European Union funds. Market's attention has shifted to the US Nonfarm Payroll report to be release next Friday, as strong figures will be seen as a confirmation of a March hike. 

The EUR/USD pair recovery was enough to trim previous week's losses, but not enough to confirm  further gains ahead, or even to confirm a bottom, as the price has been unable to extend beyond the 1.0630 region for a third consecutive week. The daily chart shows that the recovery stalled below a sharply bearish 20 SMA, whilst the Momentum indicator has turned flat around its 100 level, failing to enter positive territory, whilst the RSI hovers around 43. In the 4 hours chart, technical readings support a short-term bullish continuation, as the price broke higher pass its 20 and 100 SMAs that anyway maintain their bearish slopes, whilst technical indicators hold well above their mid-lines, barely paring their advances ahead of the weekly close. The recovery can extend up to the critical 1.0700/20 price zone, although strong selling interest is expected to surge around this last, if reached. 

Support levels: 1.0590 1.0565 1.0520

Resistance levels: 1.0635 1.0660 1.0710

USD/JPY

The USD/JPY pair closed the week with strong gains around 114.00, but pulled back on Friday from 114.74 as the dollar eased against all of its major rivals. The USD/JPY pair has been trading in a well-limited range ever since early February, with the upside capped by 114.55, the 23.6% retracement of the November/December bullish run. On Friday, Bank of Japan Deputy Governor Hiroshi Nakaso said that  the current policy framework offers the flexibility and sustainability to achieve the BOJ's "strong commitment" to raising inflation to a goal. Dollar's strength ever since Donald Trump won the US elections has taken some steam off the Central Bank as the JPY weakened,  although the uptick in inflation has been quite shallow so far. From a technical point of view, the daily chart shows that the price has recovered above a bullish 100 DMA, now the immediate support at 113.50, but also that technical indicators lack upward strength, and hover within neutral territory. In the 4 hours chart, technical indicator have pulled down sharply from overbought levels, with the Momentum poised to enter negative territory, whilst the 100 and 200 SMAs converge at 113.25, providing a not so strong support due to the lack of directional strength. February's high stands at 114.95, and the pair needs to settle above it to be able to shrug off its negative tone. 

Support levels: 113.50 113.25 112.90 

Resistance levels: 114.55 114.95 115.30 

GBP/USD

The British Pound was the worst performer last week, undermined by soft UK data and renewed concerns about the consequences of the upcoming Brexit. The GBP/USD pair closed the week at 1.2293, having traded as low as 1.2213, its lowest since mid January. UK's PM May suffered its fresh setback in the Parliament this week, as the House of Lords voted for an amendment to protect EU citizens living in the UK after the kingdom leaves the EU. PM May expects to revert peers' decision this week, when the Brexit bill will return to the House of Commons. On Friday, the UK Markit services PMI showed that the sector's growth eased to a 5-month low in February printing 53.3 following a 54.5 in January. The GBP/USD pair daily chart shows that the price managed to settle above the 61.8% retracement of the January rally at 1.2260, the immediate support, but also that it stands well below a bearish 20 DMA, this last at 1.2440, whilst technical indicators hold within bearish territory with no certain directional strength, maintaining the risk towards the downside. In the  4 hours chart, the recovery stalled at a sharply bearish 20 SMA, at 1.2300, while technical indicators recovered from oversold levels, but pared gains below their mid-lines, limiting chances of a steeper advance. 

Support levels: 1.2260 1.2225 1.2170 

Resistance levels: 1.2300 1.2345 1.2390 

AUD/USD

The AUD/USD pair closed the week in the red around 0.7600, having fallen down to 0.7542, its lowest since late January. On Thursday, the Aussie plunged following the release of a disappointing January Trade Balance, which showed a surplus of 1,302M against 3,800M expected, due to a 3% fall in exports, and as the greenback strengthened across the board. The week will be quite busy in Australia, as the country will release Retail Sales on Monday, while the RBA will have its monetary policy meeting this Tuesday. In the meantime, the technical picture shows that the pair settled right below the base of its February's range, and that in the daily chart, it's now well below its 20 SMA that turned flat around 0.7680. Indicators in the mentioned time frame hold within negative territory, although the downward momentum eased on Friday's recovery. Shorter term, the 4 hours chart shows that technical indicators have recovered from oversold readings, but also that the price is far below a bearish 20 SMA, also below the 200 EMA, both in the 0.7600/20 region. A recovery above this area should take off some of the bearish pressure, but gains will likely remain contain below the critical 0.7700 level.

Support levels: 0.7550 0.7510 0.7470

Resistance levels: 0.7620 0.7650 0.7695

Dow Jones

US equities closed modestly higher on Friday, with the Dow Jones Industrial Average up 2 points, to 21,005.71. The Nasdaq Composite added 9 points and closed at 5,870.75, while the S&P ended at 2,383.12, 0.05% higher. Financial-related equities soared on Yellen's comments about a possible rate hike this March, if employment and inflation continue within FED's expectations. Within the Dow, Caterpillar was the best performer, up 0.81%, followed by Merck & Co that added 0.76%. Nike led decliners, shedding 1.90%, followed by Wal-Mart that closed 1.03% lower. The DJIA daily chart shows that it held far above a bullish 20 DMA, while the Momentum indicator heads sharply lower within positive territory, and the RSI consolidates at 77, correcting part of the extreme overbought readings reached in the week. In the 4 hours chart, the index hovers around a bullish 20 SMA, while the RSI indicator consolidates around 54, but the Momentum indicator heads sharply lower within negative territory, anticipating a downward corrective move on a break below 20,934, Friday's low and the immediate support. 

Support levels: 20,934 20,882 20,827

Resistance levels: 21,064 21,114 21,164

FTSE 100

The FTSE 100 closed at 7,374.26 on Friday, down daily basis by 8 points or 0.11%, but firmly higher weekly basis and at record highs. Investors were cautious ahead of speeches from US key policymakers, including FED's head Janet Yellen. A weaker Pound provided support to local equities, although plummeting WWP dragged the benchmark lower. The world's largest advertising company closed down 7.95%, topping losers' list after reporting a sharp decline in its revenue growth. Fresnillo was also among the worst performers, down 2.89%. Old Mutual led advancers adding 1.81%, followed by Standard Live that closed 1.75% higher. Ahead of the weekly opening, the index retains the positive tone, although with no upward strength, as it holds above a bullish 20 DMA, but technical indicators turned modestly lower, the Momentum around its mid-line and the RSI at 66. In the 4 hours chart, the index remains well above a strongly bullish 20 SMA, whilst technical indicators retreated from overbought readings, supporting a downward corrective move on a break below Friday's low at 7,352.

Support levels: 7,352 7,320 7,287 

Resistance levels: 7,397 7,420 7,450

DAX

European equities closed in the red on Friday with the German DAX down 32 points to 12,027.36. In the region, banks were among the best performers, while commodity-related equities led declines.  Despite Friday's poor performance, the DAX ended above 12,000 its highest weekly settlement since April 2015. Commerzbank topped winners' list, up 4.14%, followed by RWE AG that added 1.36%. Deutsche Bank was the worst performer, down 5.45%. The bank supervisory board is meeting on Sunday to discuss a $8.5B capital raise, after announcing on Friday that its planning an equity offering and the sale of part of its asset management unit after failing to find a buyer for its Postbank consumer business. Technically, the daily chart shows that the benchmark remains firmly above all of its moving averages, while the Momentum indicator holds above its 100 level, lacking certain directional strength and the RSI indicator retreats partially from overbought readings. In the 4 hours chart, the 20 SMA maintains a sharp bullish slope well below the current level, while technical indicators are pulling back from overbought territory, favoring a short term downward correction, particularly on a break below 11,989.   

Support levels: 11,989 11,938 11,867

Resistance levels: 12,053 12,100 12,148 

Nikkei

The Nikkei 225 lost 95 points on Friday, but managed to close the week firmly higher at 19,469.17. The index fell on Friday following previous Wall Street´s decline, and as investors turned cautious ahead of Yellen's speech. Japanese inflation showed signs of life, with core CPI up to 0.1% yearly basis in February, first time in positive territory since 2015. Also released on Friday, household spending fell by 1.2% in the year to January, following a 0.3% decline in December, triggering concerns about the strength of domestic demand. Within the Nikkei, Fast Retiling was the best performer, up 2.11%, while Sumco led declines, down by 5.16%. In the daily chart, the index held above a bullish 20 DMA, but technical indicators have lost their early week positive momentum and turned flat around their mid-lines. In the 4 hours chart, the index settled a few points below a sharply bullish 20 SMA, while technical indicators entered bearish territory, maintaining strong bearish slopes ahead of the opening, in line with further declines at the beginning of the week. 

Support levels: 19,420 19,369 19,318

Resistance levels: 19,505 19,566 19,609

Gold

Gold bounced on Friday from a fresh 2-week low of 1,222.80, but closed the week with strong losses, with spot at $1,234.15 a troy ounce, bearing anyway pretty well with dollar's strength and the possibility of a March rate hike in the US. The bright metal has been under pressure ever since topping at 1,263.79 at the beginning of the week, undermined by Fed's officers rhetoric, supporting a rate hike as soon as this March, reiterated on Friday by head's Yellen. The bright metal settled above the 50% retracement of the post-US election slump, at 1,230.00, although in the daily chart the price is below a now horizontal 20 DMA, after failing to surpass the 200 DMA, whilst technical indicators present a downward slope, but so far hold above their mid-lines, indicating an increasing bearish potential. In the 4 hours chart, the 20 SMA has turned sharply bearish above the current level and is about to cross below the 100 SMA, while technical indicators have managed to recover from oversold readings, but turned flat within bearish territory.

Support levels: 1,230.00 1,222.80 1,210.90

Resistance levels: 1,238.60 1,245.50 1,255.20

WTI Crude Oil

West Texas Intermediate crude oil futures closed the week with modest losses at $53.20 a barrel, recovering on Friday from a fresh 3-week low of 52.53, as the dollar eased against all of its major rivals. Oil was also supported by news coming from the OPEC as early reports of February compliance suggest the organization was close to the 100% in the month. On the downside, the oilfield company Baker Hughes reported that the number of active drilling rigs rose for a seventh consecutive week, up by 7 to a total of 609. From a technical point of view, the daily chart shows that the commodity closed below a horizontal 20 DMA but above a modestly bullish 100 DMA, this last around 51.50, while the Momentum indicator remains flat around its 100 level, and the RSI heads modestly higher around 46, all of which limits chances of a steeper recovery. In the 4 hours chart, the price is well below all of its moving averages, with the 20 SMA having already crossed below the 100 SMA and now converging with the 200 SMA at 53.40, and technical indicators heading nowhere within negative territory, in line with the longer term perspective. 

Support levels: 52.50 51.90 51.40

Resistance levels: 53.70 54.20 54.80

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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.