The USD weakened against a number of its counterparts yesterday, as new dovish comments by Fed officials were made. Specifically, NY Fed President Williams stated that the Fed’s rate hikes will occur, but were considered in the context of a very strong economy. He also stated that the Fed is not on a preset course and could adjust its monetary policy to keep the economy strong and inflation low. The comments strengthened concerns about a possible slowdown of the rate hikes with worries rising about a possible end to USD’s rally. Analysts however continue to stress the importance of the USD as a safe haven and the possibility of a comeback. The greenback seems to have weakened also due to poor housing data results yesterday and today’s financial releases could be closely watched.
USD/JPY dropped yesterday as it broke the 112.72 (R1) support line (now turned to resistance). We maintain a bearish outlook for the pair as the downward trendline incepted since the 15th of November remains intact. Should the pair continue to trade in bearish market we could see it aiming if not breaking the 112.15 (S1) support line. If on the other hand the bulls take over we could see the pair breaking the prementioned downward trendline, the 112.72 (R1) resistance line and aim for the 113.25 (R2) resistance level.
EUR strengthens despite Italy-Brussels standoff
The EUR continued to strengthen against the USD yesterday despite the standoff between the Italy and Brussels. Analysts seem to be concerned about a possible economic slowdown in the Eurozone and especially Germany and France. Expectations currently are however for the EUR to strengthen, albeit the market may monitor closely the preliminary release of the PMI’s on Friday for further clues. We could see some volatility rise for the common currency as it strengthens during the day.
EUR/USD rose yesterday breaking the 1.1430 (S1) resistance line (now turned to support). We could see the pair trading in a bullish market today as the upward trendline incepted since the 15th of November, seems to be still guiding the pair’s direction. Please be advised that the RSI indicator remains near the reading of 70 in the 4 hour chart implying a rather overcrowded long position for the pair. Should the pair find fresh buying orders along its path we could see the pair breaking the 1.1490 (R1) resistance level and aim for the 1.1550 (R2) resistance hurdle. Should it, on the other hand come under selling interest we could see it breaking the prementioned upward trendline, the 1.1430 (S1) support line and aim for the 1.1385 (S2) support zone.
In today’s other economic highlights:
In today’s European session we get Germany’s PPI growth rate for October and in the American session from the US we get the numbers of building permits and housing starts for October. Also late in the American session the API weekly crude oil figure is due out. As for speakers RBA’s Governor Philip Lowe speaks, while in the UK the Inflation Report Hearings will be held, with BoE’s Governor Mark Carney speaking. Please be advised that in the crypto market Bitcoin has dropped even further marking new lows and is testing the 4500 support level, while ripple remained rather stable. Gold also moved in a sideways manner yesterday and should you be interested in more fundamentals and technical analysis about the bullion, please refer to our gold weekly outlook later today.
USD/JPY H4
Support: 112.15 (S1), 111.60 (S2), 111.10 (S3)
Resistance: 112.72 (R1), 113.25 (R2), 113.95 (R3)
EUR/USD H4
Support: 1.1385 (S1), 1.1345 (S2), 1.1305 (S3)
Resistance: 1.1490 (R1), 1.1550 (R2), 1.1610 (R3)
