There were some wild swings in the EUR/USD pair after Italy rejected Renzi’s Constitutional reforms by voting 'No'

EUR/USD

There were some wild swings in the EUR/USD pair after Italy rejected Renzi’s Constitutional reforms by voting 'No' in the referendum held this Sunday. Risk aversion took over financial markets with the American dollar benefiting by the most, and the pair plummeting to a fresh yearly low of 1.0504. London opening was a game changer, as stocks' markets surprisingly shrug off fears of a banking system collapse and rallied sharply. Several European authorities were behind the EUR's recovery, after talking down the effects of the referendum among the EU banking sector. The pair changed course, and advanced up to 0.7497 in the US afternoon, as US stocks surged to fresh record highs, and settled a few pips above the high.

Earlier in the day, the EU Markit final November Services and Composite PMIs showed that the region's growth continued rising at a fast pace, as the Composite PMI printed 53.9, slightly below expected, but still at an 11-month high. Retail sales in the region, surged by 1.1% in October and when compared to the previous month, better than the 0.9% expected, although the Sentix Investor Confidence index for December fell to 10.0 from previous 13.1. In the US, the ISM Non-manufacturing PMI for November jumped to 57.2 from previous 54.8, beating expectations and the highest in over a year.

The pair enters the Asian session with a strong upward potential, although some consolidation could be expected after the rally advanced almost 300 pips. According to the 4 hours chart, the pair can advance further, as it broke above its 20 and 100 SMAs, both now converging around 1.0640, while the Momentum and the RSI indicators maintain their sharp upward slopes within overbought levels. The pair has a strong resistance in the 1.0800/10 region, where it also presents the 200 SMA in the mentioned time frame. Should the rally extend beyond it, the pair will likely extend up to the 1.0840/60 region, a major static resistance area.

Support levels: 1.0745 1.0700 1.0606

Resistance levels: 1.0810 1.0850 1.0890

USD/JPY

The USD/JPY pair fell down to 112.86 at the beginning of the day, but recovered up to 114.77 afterwards, trading mostly on market's sentiment. The safe-haven yen was on demand early Asia, following news that Italian PM Renzi resigned after losing the referendum held in Italy this Sunday, to modify the local constitution. Mr. Renzi proposed a reduction of the number of politicians within the houses, to speed up the law-making process in the country, in order to boost the depressed economy. The economic calendar will remain light in Japan, which means that the pair will likely continue trading on sentiment. The pair has erased all of its daily gains as US stocks retreated from their highs ahead of the close, settling around 113.50. In the 1 hour chart, the pair has broken below its 100 SMA, but bounced twice from a bullish 200 SMA ever since the day started, now at 113.15, the immediate support. In the mentioned chart, the Momentum indicator is flat around its 100 level, while the RSI indicator hovers around 41. In the  4 hours chart, technical indicators head south within bearish territory, but the 100 and 200 SMAs have extended their advances below the current level, while the price keeps hovering around the 114.00 level, indicating limited selling interest around the pair. 

Support levels: 113.15 112.80 112.35

Resistance levels: 114.00 114.45 114.90 

GBP/USD

The GBP/USD pair fell down to 1.2624 at the weekly opening, undermined by risk aversion following the outcome of the Italian referendum, which ended up with PM Renzi resigning. The GBP&USD pair however, quickly recovered the ground lost, and established above 1.2690, spending the rest of the day consolidating within this last and a fresh multi-month high of 1.2747. During the European morning, the UK Markit services  PMI  for November  came in at 55.2, up from 54.5 in October, the best reading since January and another indication that the UK economy is doing much better-than-expected after the Brexit.  Technically and in the short term further gains could be expected, as in the 1 hour chart, the pair is steadily bouncing from a bullish 20 SMA, while technical indicators have turned higher within positive territory, with limited upward strength. In the 4 hours chart, the 20 SMA heads sharply higher below the current level, while technical indicators have corrected overbought conditions, but turned back higher. Further gains beyond the 1.2750 level should see the pair extending its advance firstly to 1.2793, July 6th daily low, en route to 1.2860, August monthly low.  

Support levels: 1.2690 1.2650 1.2610

Resistance levels: 1.2750 1.2795 1.2830

AUD/USD

The AUD/USD pair advanced up to its November high, paring it just a handful of pips below the 0.7500 level, at 0.7497. The Australian currency benefited from broad dollar's weakness, but also from some encouraging data coming from China, as late Sunday, the Caixin Chinese services PMI index for November came in at 53.1 from previous 52.4. This Tuesday, the RBA will have its monthly economic policy meeting, but is largely expected to leave rates unchanged. Still, the market will be closely watching Governor Lowe's comments, particularly referred to inflation after the TD Securities inflation released early Monday shows that in November, it rose by 0.1%, holding steady at 1.5% year-on-year. Short term, the 1 hour chart shows that technical indicators are consolidating near overbought readings while the 20 SMA heads higher, far below the current level, nearing a key Fibonacci support at 0.7450. In the 4 hours chart, the pair has bounced from its 20 SMA, now turning modestly higher, while technical indicators have lost upward strength within positive territory. The 200 EMA in this last time frame stands at 0.7510, the level to surpass to confirm further advances towards the 0.7600 price zone. 

Support: levels: 0.7450 0.7410 0.7370

Resistance levels: 0.7510 10.7550 0.7595

Dow Jones

Wall Street closed in the green, with the Dow Jones Industrial Average closing the day at 19,216.24 a fresh all-time high, up by 45 points or 0.24%. The index traded intraday as high as 19,282, but retreated ahead of the close. The Nasdaq Composite closed at 5,308.89, up by 1.01%, while the S&P added 12 points, to 2,204.71. Retailers were among the best performers alongside with financial equities, with Nike leading advancers, up by 2.75%, followed by Goldman Sachs Group that closed 2.32% higher. JPMorgan Chase was also among the best performers, adding 2.03%. Technically, the daily chart shows that the risk remains towards the upside, as the Momentum indicator turned north after a period of consolidation above the 100 mark, while the RSI indicator continues hovering within overbought territory. In the 4 hours chart,  and despite the record high, the index maintains a neutral stance due to limited intraday ranges over the past two weeks, with the benchmark now a few points above a horizontal 20 SMA, the Momentum indicator still stuck around its 100 level and the RSI indicator consolidating above 58, this last limiting chances of a downward move. 

Support levels: 19,177 19,120 19,067    

Resistance levels: 19,235 19,282 19,340

FTSE 100

The FTSE 100 managed to advance some, up by 16 points or 0.24% to settle at 6,746.83, with the mining sector mixed, as gold plummeted to fresh multi-month lows, but copper surged to its highest in almost eighteen months. Antofagasta was the best performer, up by 4.90%, followed by Glencore that closed 4.44%. The worst performer was Fresnillo, down 4.01% on the day, followed by Randgold Resources that ended down 3.18%. Banks closed higher, shaking off fears of contagion, with Royal Bank of Scotland adding 2.28% on the day. A strong Pound, however, maintained the rally contained, and the daily chart shows that the benchmark was unable to extend beyond a bearish 20 DMA, currently at 6,800. In the same chart, technical indicators hold within bearish territory, with the RSI aiming higher around 44 and the Momentum pulling back from its 100 level. In the 4 hours chart, the index is struggling around a bearish 20 SMA, while technical indicators lack directional strength, holding flat right below their mid-lines, suggesting that gains will remain moderate, despite improved market's sentiment. 

Support levels: 6,710 6,676 6,639 

Resistance levels: 6,802 6,845 6,881

DAX

Following a negative opening, European equities turned sharply higher, with the German DAX closing the day at 10,684.83, up by 171 points. Equities surged by the most in more than two weeks daily basis, with the damaged contained within Italy after the referendum held last Sunday ended up with PM Renzi's stepping down. An upward revision in German's PMI figures further supported the DAX, as the final Markit services figure came in at 55.1, a 6-month high,  slightly higher than the first estimate of 55.0, and above October's result of 54.2.  Carmakers and mining-related equities were among the best performers, but among the DAX, Deutsche bank topped winners list by adding 4.68%, while Commerzbank added 0.80%. The index extended above the 10,700 level after the close, and the daily chart shows that it is now back above all of its moving averages, while technical indicators have turned higher, although the Momentum remains below its 100 line. In the 4 hours chart, the benchmark is above all of its moving averages that anyway converge within a tight range around 10,580, while technical indicators stand within positive territory, but with limited upward strength, maintaining anyway the risk towards the upside. 

Support levels: 10,679 10,631 10,577

Resistance levels: 10,736 10,775 10,830

Nikkei

Asian share markets closed lower, weighed by risk aversion triggered by the outcome of the Italian referendum that fueled fears of local banks tumbling. The Nikkei 225 closed 149 points lower at 18,274.99, its lowest close in two weeks after topping last Thursday at its highest since January at 18,746.28. The best performers were Toho Zinc closed 7.90% higher, followed by Sumco Corp which added 3.81%, while financial-related equities dragged the index lower. The index, however, recovered some ground in electronic trading, tracking gains from European and American indexes, poised to open this Tuesday around 18,400. The daily chart shows that after correcting from near overbought readings, technical indicators have turned modestly higher within positive territory, whilst the intraday slide held above a bullish 20 DMA, currently at 18,159, overall suggesting a limited downward scope. In the 4 hours chart, the index is a few points below a horizontal 20 SMA, while technical indicators lack directional strength, consolidating now within neutral territory. At this point, the benchmark needs to advance beyond 18,555, the daily high, to be able to regain its upward momentum and rally towards fresh highs. 

Support levels: 18,355 18,292 18,230

Resistance levels: 18,455 18,490 18,555

Gold

Gold prices extended its slide this Monday, with spot falling down to $1,157.13 a troy ounce, its lowest since early February, but managed to bounce bank in the US afternoon, to end the day at 1,171.60, down from Friday's close of 1,175.76. The bright metal was unable to benefit from increasing risk aversion, still weighed by prospects for a  rate increase later in the month by the Federal Reserve after comments from FED's Dudley, an usual dove, who said that the Central Bank is not from its policy goals, while FED's Evans, speaking in a different event, said that he expects interest rate hikes to continue to rise as the economy improves. Technically, the metal is biased lower according to technical readings in the daily chart, as the commodity remains below a sharply bearish 20 SMA while technical indicators held within negative territory, slowly turning back lower. In the 4 hours chart, the price briefly advanced above a bearish 20 SMA, but settled below it, while technical indicators have turned neutral around their mid-lines, indicating no certain directional strength in the short term. 

Support levels: 1,166.60 1,157.10 1,146.80    

Resistance levels: 1,175.95 1,188.10 1,197.20 

WTI Crude Oil

Crude oil prices rallied at the beginning of the week, with WTI US futures trading as high as $52.39 a barrel, before turning south and settling around 51.20, pulling back on profit taking after the price advanced a few pips above its previous yearly high. Crude oil remains supported by last week's OPEC decision to cut production output, although investors may be wary to push prices too much higher ahead of the upcoming ECB and FED's meeting, the next focus of attention. From a technical point of view, the daily chart shows that the 20 DMA has advanced sharply above the 100 and 200 DMAs, but also that they all remain within a tight range and far below the current level. Indicators in the mentioned chart have partially lost their upward strength, but remain near overbought territory, showing no actual bearish strength. In the 4 hours chart, the price retreated towards a still bullish 20 SMA, this last at 50.90, the immediate support, while the Momentum indicator is modestly bouncing from its 100 level, and the RSI indicator consolidates around 59, in line with the longer term perspective. 

Support levels: 50.90 50.20 49.50    

Resistance levels: 51.80 52.40 53.10