EUR/USD
The greenback started the day with a strong footing, but pared gains and retreated from its daily highs following disappointing US data. Markit flash PMIs came in below previous month readings, with the services activity index down to 53.9 from 55.6 in January, whilst the manufacturing sector contracted to 54.3 from previous 55.0, both at fresh 2-month lows. The flash Composite PMI stands at 54.3. The positive momentum of the US currency that lasted until after US opening, was triggered by comments coming from FED’s Harker, who said that he will back a March rate hike should he see additional evidence of rising inflation.
The common currency fell in spite of fresh evidence of an accelerating pace of economic recovery, undermined by political uncertainty. The EU composite PMI rose from 54.4 to 56.0 according to the Markit flash estimate for February, the highest since April 2011. Markit Services and Manufacturing indexes were well above market’s expectations. Also, German’s preliminary February Markit PMIs showed that the growth in the manufacturing sector expanded at the fastest rate in over three years, with the index up to 57 from previous 56.4. The services sector also grew at a solid pace, up to 54.4 from previous 53.4, leaving the Composite PMI at 56.1 from previous 54.8.
The EUR/USD pair settled around 1.0550 after trading as low as 1.0525, below the 1.0565 Fibonacci resistance, as the level stands for the 23.6% retracement of the post-US election slump, and seems poised to extend its decline according to technical readings, given that in the 4 hours chart, the price is far below a bearish 20 SMA, whilst technical indicators have barely bounced from oversold readings. The pair has bounced twice from the 1.0520 region, reinforcing the strength of the static support, and therefore anticipating a strong bearish extension, once the level gives up.
Support levels: 1.0520 1.0470 1.0440
Resistance levels: 1.0565 1.0600 1.0635
USD/JPY
The USD/JPY pair closed the day marginally higher at 113.53, retreating from a daily high of 113.77, following the release of tepid US Markit PMIs, down to fresh 2-month lows. The figures were not enough to trigger concerns about US economic health, but given the underlying political uncertainty seems unlikely the safe-haven currency could ease much. US Treasury yields recovered some ground, with the 10-year note benchmark up to 2.458% intraday, before retreating back to the 2.42%, further limiting chances of a rally in the pair. In the data front, the Japanese flash Manufacturing PMI expanded to 53.5 in February from 52.7 in January, the highest reading in almost three years. The 4 hours chart shows that the pair stalled its recovery below a bearish 200 SMA, currently at 113.85 the immediate resistance, whilst technical indicators have lost upward momentum within positive territory, but are still far from confirming a downward move. The pair has met buying interest on retracements towards 113.40, now the immediate support, with a break below the level favoring a downward extension towards 112.50.
Support levels: 113.40 113.00 112.50
Resistance levels: 113.85 114.10 114.50
GBP/USD
The GBP/USD pair fell to a daily low of 1.2401 on the back of dollar’s broad strength, but trimmed all of its daily loses and closed the day flat around 1.2460. Data coming from the UK showed that public sector net borrowing (excluding public sector banks) decreased by £13.6 billion to £49.3 billion in the current financial year-to-date (April 2016 to January 2017), compared with the same period in the previous financial year, being this is the lowest year-to-date borrowing since the financial year-to-date ending January 2008. Public sector net borrowing (excluding public sector banks) was in surplus by £9.4 billion in January 2017, a £0.3 billion larger surplus than in January 2016; this is the highest January surplus since 2000. Also, BOE´s Governor Carney testified before the Treasury Committee this morning, reiterating that the Bank is open to move rates one way or the other, if deemed appropriate. The technical picture maintains the neutral stance seen on previous updates, although lower highs, well below the 1.2540 region, increase the bearish potential. In the 4 hours chart, the price keeps moving back and forth around a horizontal 20 SMA while technical indicators barely entered positive territory before turning flat. At this point, the pair needs to break below 1.2345, February low, or above the mentioned 1.2540, the 23.6% retracement of its latest bullish run, to gain some directional traction.
Support levels: 1.2430 1.2380 1.2345
Resistance levels: 1.2480 1.2530 1.2565
GOLD
Spot gold trimmed its early losses and settled at $1,246.64 a troy ounce, as soft US data offset concerns of a soon-to-come US rate hike. The commodity fell down to 1,226.09 at the beginning of the day, weighed by FED’s Harker comments, pledging for a March rate hike if inflation keeps rising, but recovered in the US afternoon, as investors wait for the FOMC Minutes to offer some hints on the pace of US rate hikes. As it is the case for the JPY, investors are reluctant to unwind their long positions in safe-haven assets. From a technical point of view, the daily chart shows that the price bounced sharply from a bullish 20 DMA, whilst the 100 DMA keeps losing downward strength, now consolidating around the 38.2% retracement of the post-US election decline. In the same chart, the Momentum indicator has lost its bearish strength, turning flat above its 100 level, whilst the RSI indicator consolidates around 62, keeping the downside well limited. In the 4 hours chart, the price is a few cents below a directionless 20 SMA, whilst technical indicators have bounced within negative territory, now aiming to enter positive territory, overall maintaining a neutral stance.
Support levels: 1,233.90 1,226.10 1,216.60
Resistance levels: 1,244.60 1,255.10 1,261.60
WTI CRUDE
Crude oil prices jumped to their highest levels since early January, with WTI futures printing $55.00 a barrel, to close around 54.53. Oil prices jumped after the OPEC reaffirmed its commitment to keep output cuts, and even do better than the 92% compliance achieved on January. US stockpiles reports will suffer a delay, with API reporting on Wednesday and the EIA on Thursday after the US holiday on Monday. The daily chart for the commodity shows that the price is firmly above an anyway horizontal 20 DMA, whilst the Momentum indicator holds flat around its 100 level, as WTI settled at the higher end of its latest range. The RSI indicator gained upward strength, currently around 58, enough at least to limit the downside this Wednesday. In the 4 hours chart, the price is well above a bullish 20 SMA, whilst technical indicators have retreated modestly within positive territory.
Support levels: 54.00 53.40 53.00
Resistance levels: 55.20 55.70 56.30
DJIA
Wall Street resumed its rally to record highs after Monday’s holiday, with the three major indexes closing once again at all-time highs. The Dow Jones Industrial Average added 118 points or 0.57 %, to close at 20,742.11, up for eighth straight session, whilst the S&P finished at 2,365-38, up by 14 points or 0.60%. The Nasdaq Composite settled at 5,865.95 up by 0.47%. Within the Dow, Wal-Mart was the best performer, up 3.12% after the company reported fiscal earnings in Q4, and same-store sales that beat expectations. Caterpillar on the other hand, topped losers’ list, down 0.74%. The DJIA traded as high as 20,757, and the daily chart shows that technical indicators have resumed their advances within extreme overbought readings, with the RSI now heading north at fresh monthly highs above 80. In the same chart, the 20 SMA has accelerated its advance, but remains well below the current level, reflecting the strength of the ongoing advance. Shorter term, and according to the 4 hours chart, a bullish 20 SMA provided intraday support at the beginning of the day, currently at 20,638, whilst technical indicators have turned flat in overbought territory, as the index was unable to surpass the early high.
Support levels: 20,692 20,638 20,588
Resistance levels: 20,757 20,800 20,845
FTSE 100
The FTSE 100 closed at 7,274.83, down 25 points or 0.34%, dragged lower by HSBC, as the lender bank reported a net loss of $4.22 billion for the fourth quarter of 2016. HSBC was the second worse performer, down 5.91% after Mediclinic International that shed 8.94%. Rolls Royce Holdings was the best performer, up 9.98%, followed by Antofagasta that added 3.76%. Adding pressure on the Footsie was the Pound that remained strong above the 1.2400 level against the greenback. The index seems to have entered a consolidative stage, and the daily chart shows that the index is still above a bullish 20 SMA, but technical indicators are losing upward strength, retreating within positive territory. Friday’s low at 7,253 is the key, as the bearish potential will probably be limited as long as it holds above it. In the 4 hours chart, the index has settled below a horizontal 20 SMA, whilst technical indicators have turned flat around their mid-lines, confirming the neutral stance.
Support levels: 7,253 7,212 7,162
Resistance levels: 7,306 7,354 7,390
DAX
European equities benchmarks closed higher, with the German DAX adding 141 points or 1.18% to close at 11,967.49, its highest since April 2015, as much stronger-than-expected PMI growth figures boosted local confidence. Siemens was the best performer, up 2.78%, followed by Adidas that added 2.31%. Banks underperformed, with Commerzbank ending the day 0.42% lower as the sector was affected by the horrid earnings report of HSBC. From a technical point of view, the index maintains a clearly bullish stance, as in the daily chart, it rallied further above a now bullish 20 SMA, whilst technical indicators have extended their advances within positive territory, with the RSI now entering overbought territory. In the 4 hours chart, the index bounced sharply after testing a strongly bullish 20 SMA, whilst technical indicators maintain strong bullish slopes, despite being in overbought territory, in line with further gains, particularly on a break above 11,987 the intraday high.
Support levels: 11,782 11,730 11,694
Resistance levels: 11,848 11,891 11,930
