EUR/USD
Expectations ahead of Trump’s speech before the Congress, kept major pairs limited to tight ranges for a second consecutive day. US President Trump will address a joint session of the Congress early Asia this Wednesday, and has anticipated he will discuss increasing 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. Markets are expecting some clearer guidance and not just pledges, although this last has more chances to occur.
The EUR/USD pair posted some modest gains daily basis, settling above 1.0600, but still contained by last week highs in the 1.0630 region, helped by worse-than-expected US macroeconomic data. 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.
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 GBP/USD pair ends the day marginally lower, as the Pound remained weighed by jitters about a possible Scottish independence referendum, at the time the UK is getting ready to leave the EU. There were no macroeconomic releases in the UK this Tuesday, neither fresh news on Scotland or Brexit, although the kingdom will release its money figures alongside with the preliminary Markit manufacturing PMI for February this Wednesday, this last, expected to have ticked modestly lower to 55.5. 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
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
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
DJIA
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
