EUR/USD
The EUR/USD pair fell briefly below the 1.0600 threshold for the first time in over three weeks, as the "Trump-trade" continues firming up, with Wall Street reaching all-time highs for a third consecutive session. Action across the forex board was limited, as the calendar was extremely light in this first day of the week, although plenty of first-tier data will be released during the upcoming days, with German inflation, EU preliminary Q4 GDP, UK inflation and US PPI among the most relevant for this Tuesday. The positive mood was triggered by comments from US President Trump, after spending the weekend with Japanese PM Abe, who said that "bilateral co-operation is essential," between the two nations, somehow, toning down his rhetoric about foreign policy. Weighing on the common currency were comments from IMF Lagarde, who said that the organism can agree special deals for any country. The bailout program of the troubled country is under review, with the parts unable to reach an agreement that can save Athens from default.
The EUR/USD pair settled around the 1.0600 level by the end of the day, with a clear bearish stance having took one step further in its way to breaking below the critical 1.0565 support, the 23.6% retracement of the November/January decline. In the 4 hours chart, a bearish 20 SMA keeps containing the downside, now converging with the 200 SMA at 1.0650, whilst technical indicators hold within bearish territory, although with no certain directional strength, amid limited volumes. Advances up to the 1.0700/20 region will be likely be seen as selling opportunities, although a break beyond this last could see the recovery extending up to 1.0800/40, should upcoming US data disappoint big.
Support levels: 1.0590 1.0565 1.0520
Resistance levels: 1.0650 1.0690 1.0720
USD/JPY
The USD/JPY pair added modest 40 pips at the beginning of the week, surprisingly limited, despite rising US yields and equities. Early Monday, Japan released its Q4 GDP figures, showing that the economy expanded by 0.2% in the three months to December, and by 1% annually. The figures were slightly below market’s expectations of 0.3% and 1.1% respectively, although Japan’s finance minister, Nobuteru Ishihara, said that the soft growth didn’t affect the government’s view that the economy remains in a moderate recovery. During the upcoming Asians session, the country will release its December industrial production figures, with better-than-expected readings fueling confidence among local investors and resulting in the JPY easing further. From a technical point of view, the upward potential remains limited, given that the pair is below the critical 114.50/60 region, the 23.6% retracement of the latest bullish run, and where a bearish 200 SMA stands in the 4 hours chart. In the same time frame, the Momentum indicator has turned sharply lower, but remains within positive territory, while the RSI has also turned modestly lower around 60. The daily low was set at 113.43, the immediate support and the level to break to see the pair easing further below the 113.00 mark.
Support levels: 113.40 113.00 112.60
Resistance levels: 114.00 114.55 114.90
GBP/USD
The GBP/USD pair closed the day marginally higher around the 1.2500 level, with Pound’s bulls offsetting moderate dollar’s demand. Investors are waiting for the upcoming releases in the UK this week, with the kingdom set to publish its wholesale and retail inflation figures for January this Tuesday, generally expected above December final readings, and employment numbers next Wednesday. Focus will be on inflation, as a faster-than-expected pace of price growth, may force the BOE to revert its latest decision to cut rates to record lows, pushing the Pound higher as speculative interest rushes to price in the possible Central Bank’s move. From a technical point of view, the pair met selling interest around the 23.6% retracement of the January/February rally this at 1.2535, the level to surpass to consider a more constructive outlook. In the 4 hours chart, the price is stuck around a horizontal 20 SMA, whilst technical indicators head nowhere around their mid-lines, reflecting the current investors’ wait-and-see stance. Short term buying interest is aligned between 1.2470 and 1.2480, with a break below it probably resulting on a test of 1.2430, the next Fibonacci support.
Support levels: 1.2470 1.2430 1.2390
Resistance levels: 1.2535 1.2585 1.2620
GOLD
Spot gold fell to $1,219.26 a troy ounce this Monday, as risk appetite dominate the scene. The bright metal, however, bounced from the level to close the day around 1,226.50, on physical demand at the bullion market, as Indian jewelers bought to meet the wedding season demand. Also, limiting the slide were higher base-metal prices, on fears of copper shortages amid a strike in one of Chile’s largest mine. The daily chart for gold indicates that the upward potential eased, but it’s too early to call for a retracement, given that the price remains well above a bullish 20 DMA that remains above the 100 DMA, whilst technical indicators retreat, but remain within positive territory. In the 4 hours chart, the price is below a bearish 20 SMA that holds a few cents above the 50% retracement of the post-US election decline, this last around 1,230.00, while technical indicators have recovered within negative territory, holding below previous daily highs. Renewed selling interest below the mentioned daily low will likely see the commodity approaching the critical 1,200 region this Tuesday, where the latest bullish movement will be at risk of reversing.
Support levels: 1,219.20 1,210.10 1,200.00
Resistance levels: 1,230.00 1,237.10 1,244.70
WTI CRUDE
West Texas Intermediate crude oil futures advanced for a second consecutive day, with the commodity setting a couple of cents above 53.00. WTI set a daily high of $53.20 a barrel, still underpinned by Wednesday’s news, showing an unexpected draw in US gasoline stockpiles that suggest rising demand for the commodity. Despite a large build in crude inventories, the commodity advanced for a second consecutive day, although the price continues developing within the range set mid December. Technically, the daily chart shows that the price is now around a flat 20 SMA, whilst technical indicators have turned flat around their mid-lines, indicating a limited upward scope. In the 4 hours chart, the price advanced beyond a still bearish 20 SMA, but is currently struggling with the 100 and 200 SMAs, both flat, whilst the Momentum indicator heads higher above its 100 level and the RSI remains flat around 54, in line with the longer term view.
Support levels: 52.50 51.80 51.10
Resistance levels: 53.20 53.65 54.20
DJIA
US equities extended their Thursday’s rally, with all of the three major indexes closing the day at all-time highs. On Friday, the Dow Jones Industrial Average added 96 points or 0.48% to end at 20,269.37, while the S&P gained 0.36% to 2,316.10. The Nasdaq Composite settled at 5,734.13, up by 18 points. Stocks rallied on Trump’s promises of an upcoming tax reform, and a recovery in oil prices that lifted the energy sector. Within the Dow, Caterpillar led gainers, up by 2.50%, followed by NIKE that added 1.65% and Boeing, up by 1.19%. On the losing side, Coca-Cola topped losers’ list, down 1.62%, followed by Wal-Mart Stores that shed 1.53%. From a technical point of view, the upside is favored given that in the daily chart the Dow is well above a modestly bullish 20 SMA, whilst the RSI indicator heads higher around 70, with the Momentum indicator, however, diverging, neutral around its 100 line. In the 4 hours chart, the bias is firmly bullish with the index well above a bullish 20 SMA, the Momentum indicator heading north near overbought readings and the RSI hovering around 72.
Support levels: 20,228 20,157 20,090
Resistance levels: 20,297 20,350 20,415
FTSE 100
The FTSE 100 closed the day at 7,278.92, up by 20 points or 0.28%, underpinned by an advance in mining-related equities. Despite Pound’s strength, a strike in Chile’s largest copper mine kept the benchmark afloat. Anglo American gained 4.21%, Rio Tint 3.0% while Glencore added 2.56%, all topping gainers´ list. Capita, on the other hand, was the worst performer, down by 2.38%, followed by Fresnillo that lost 1.99%. In the daily chart, the upward momentum is fading in technical indicators, although they remain within positive territory, whilst the index stands above a bearish 20 DMA, currently at 7,190. In the shorter term and according to the 4 hours chart, the risk is towards the upside, as technical indicators have turned flat near overbought readings, but the benchmark stands above a bullish 20 SMA and not far from the record high posted last January at 7,354.
Support levels: 7,208 7,163 7,128
Resistance levels: 7,275 7,326 7,354
DAX
The German DAX advanced 108 points or 0.92% to close at its highest in over two weeks, as European equities benefited from a rally in basic resources´ stocks that began in Asia. Volkswagen was the best performer, up by 2.42%, while Deutsche Bank also made it to the top ten list, closing up 1.65%. Commerzbank was unable to follow suit, ending the day 0.34% lower. The index is biased higher according to technical readings in the daily chart, as it stands above a horizontal 20 DMA, whilst the Momentum indicator aims modestly higher around its 100 level, and the RSI indicator heads north around 62. In the shorter term, and according to the 4 hours chart, the 20 SMA has turned higher, now converging with the 100 SMA around 11,640, the Momentum indicator advances near overbought readings, whilst the RSI indicator consolidates within overbought readings, also maintaining the risk towards the upside.
Support levels: 11,745 11,694 11,640
Resistance levels: 11,815 11,854 11,891
