EUR/USD
Major pairs were confined to tight intraday ranges this Monday, with the dollar closing the day mixed after Trump’s comments during the American afternoon, saying that there is "no choice" but to spend on infrastructure. Trump will address the Congress this Tuesday, and present the first federal budget proposal, expected to call for a $54 billion increase in defense spending, to be offset with a similar cut in domestic programs. The EUR/USD pair retreat from a daily high of 1.0630 and settled a few pips below the 1.0600 level, having trimmed half of its daily gains, on renewed hopes that the US economy will get a boost from the new administration.
In the data front, the EU Economic Sentiment Indicator for February increased from 107.9 to 108.0, the highest reading in almost six years. Industrial confidence rose to 1.3 from 0.8, while sentiment in the services sector improved to 13.8 from previous 12.8, in line with data released since last December, indicating sustained growth in the region. In the US, orders for durable goods recovered in January, up 1.8% after a 0.8% decline in December, although the core reading, which excludes transportation, fell by 0.2% from a previous advance of 0.9%. Also, the Pending Home Sales Index unexpectedly decreased by 2.8% in the month.
The EUR/USD pair broke above a daily descendant trend line coming from February high at 1.0828, with a limited upward potential according to the 4 hours chart, as the recovery stalled around a bearish 100 SMA, whilst technical indicators have lost upward strength, with the Momentum having turned sharply lower within positive territory, and the RSI indicator losing upward strength within positive territory. Political woes have kept the upside well-limited in the common currency, but that doesn’t mean that the pair can’t run higher if the dollar keeps weakens. Still any advance should be contained by selling interest around 1.0700/20, the region that capped the upside for most of this February.
Support levels: 1.0520 1.0470 1.0440
Resistance levels: 1.0590 1.0635 1.0660
USD/JPY
The USD/JPY pair flirted with Friday’s low at the beginning of the day, falling down to 111.93 before recovering up to 112.48 mid London morning. The pair retreated at the beginning of the US session, as US data was generally disappointing, with the advance in the Durable Goods Orders’ headline, being offset by the core reading that came in negative, and pending home sales that fell well beyond expected. The pair, however, broke higher ahead of Wall Street close as stocks recovered their early losses, while Treasury yields advanced following comments from US President Trump, pointing to large infrastructure investment. The 10-year note benchmark jumped to 2.36% after plummeting to 2.32% on Friday, backing the advance in the pair. Holding near a daily high of 112.72, the 4 hours chart shows that technical indicators have turned sharply higher from oversold readings and are currently entering positive territory, not enough at this point to confirm a stronger advance, whilst the 100 and 200 SMAs maintain bearish slopes above the current level, with the shortest around 113.05. The advance could extend, should the positive sentiment persist, although investors may turn cautious and wait for Trump’s speech before the Congress before giving the pair another directional push.
Support levels: 112.50 111.95 111.60
Resistance levels: 113.05 113.45 113.90
GBP/USD
The GBP/USD pair fell at the beginning of the day, extending its slide down to 1.2383 early London, on reports released by the Times, saying that the UK government is preparing for a potential independence referendum in Scotland next March. The news also reported that PM May agreed to such referendum, on the condition that it is held after the UK leaves the EU. The pair recovered from the mentioned low, advancing up to 1.2478 during the American session, on broad dollar’s weakness. The UK will release its GFK Consumer Confidence Survey this Tuesday, expected to have fallen in February by 6 against January -5, while the House of Lords is expected to give a final verdict on the Brexit bill next Wednesday. From a technical point of view, the GBP/USD pair maintains a negative bias, as the intraday recovery stalled around a flat 20 SMA, while technical indicators have failed to surpass their mid-lines, and resumed their declines. The pair has bounced multiple times from the 1.2380 region, an immediate strong support, although it will take a break below 1.2345, February low and the 50% retracement of the latest bullish run, to confirm a steeper decline for the upcoming sessions.
Support levels: 1.2380 1.2345 1.2300
Resistance levels: 1.2480 1.2530 1.2565
GOLD
Gold prices extended their advance at the beginning of the day, with spot reaching a fresh yearly high of 1,263.79 before ending the day in the red, a few cents below $1,255.00 a troy ounce. The safe-haven metal eased on hopes US President Trump will unveil his infrastructure investment’ plans this Tuesday, when he will address a joint session of Congress. From a technical point of view, the daily chart shows that the price surged briefly above its 200 DMA before reversing course, whilst technical indicators keep retreating within positive territory, yet at the same time, its holding at multi-month highs while developing above a bullish 20 DMA, this last at 1,236.98. Additionally, the pair is consolidating around the 61.8% retracement of the post-US election decline, indicating a limited downward potential at the time being. In the 4 hours chart, technical indicators have turned sharply lower from overbought readings, still holding within positive territory, while the price is well above all of its moving averages, with the 20 SMA heading sharply higher at 1,250.20, providing an immediate support.
Support levels: 1,250.20 1,242.50 1,230.00
Resistance levels: 1,263.80 1.273.20 1,281.70
WTI CRUDE
West Texas Intermediate crude oil prices closed the day unchanged, at $54.04, trimming its modest daily gains on news that a pipeline in Kirkuk, Iraq, was blown-up killing at least one and injuring several members of the Kurdish security forces. The pipeline is a focus of conflict, as it will allow Iraq to export oil through Iran, and diversify away from Kurdistan. Also, fears that increasing US production will offset OPEC’s efforts to push prices higher, limited gains in the commodity. Technically, oil maintains the neutral stance seen on previous updates, with the price still developing above a horizontal 20 DMA, and technical indicators heading nowhere around their mid-lines. In the 4 hours chart, the price continued to move back and forth around a directionless 20 SMA, whilst technical indicators are standing within negative territory, but lacking directional strength.
Support levels: 53.40 53.00 52.50
Resistance levels: 54.75 55.30 56.00
DJIA
Another day, another record high for the Dow. The US index advanced 15 points or 0.08% to close at 20,837.44, its 12th consecutive record high. The Nasdaq Composite added 16 points and ended at 5,861.90, while the S&P closed at 2,369.73, up by 0.10%. Industrial and energy-related equities led the advance within the Dow, after US President Trump said that there is "no choice" but to spend on infrastructure. Caterpillar was the best performer, up 2.03%, followed by Chevron, which added 1.50%. The last time the Dow advanced for twelve days in-a-row was back in 1987, right ahead of the Black Monday and the market crash. Gains have been quite limited in the last four trading sessions, reflecting investors are hesitant to push equities too much higher. In the daily chart, the index remains well above a healthy bullish 20 DMA, while the RSI indicator hovers around 83, and the Momentum indicator retreats modestly from near overbought territory, still far from suggesting a downward move. In the 4 hours chart, the index still holds above a bullish 20 SMA, while technical indicators head lower within positive territory, lacking strength enough to confirm a bearish breakout.
Support levels: 20,794 20,742 20,695
Resistance levels: 20,855 20,900 20.940
FTSE 100
The FTSE 100 managed to add 9 points or 0.13% to close at 7,253.00 this Monday, helped by a weaker Pound that helped offset losses in the insurance sector. News that the Ministry of Justice changed the way of calculating personal injury claims affected insurance companies’ equities, on speculation that payouts will be increased and affect companies’ profits. Direct Line plunged 7.16%, while Admiral Group shed 2.46%. Financial-related equities also closed in the red, with Royal Bank of Scotland down 2.02%. The daily chart shows that the Footsie settled above its 20 SMA, currently at 7,239, while technical indicators present modest upward slopes within positive territory, indicating that the downside potential remains limited. In the 4 hours chart, however, the index is holding right below a bearish 20 SMA, while the Momentum indicator is unable to surpass its 100 level. The RSI indicator in this last time frame advances around 50, not enough to confirm further advances for this Tuesday.
Support levels: 7,238 7,195 7,160
Resistance levels: 7,285 7,315 7,342
DAX
European equities ended the day pretty much flat in a dull trading session, with the German DAX settling at 11,822.67, up by 18 points or 0.16%. An early advance in oil prices kept the energy sector up, preventing the index from ending lower, while financials underperformed, following the lead of their Asian counterparts. In Germany, Adidas was the best performer, closing up 3.88%, followed by E.ON that added 2.62%. Deutsche Boerse topped losers’ list, ending down 3.93%, while Volkswagen shed 1.17%. DAX’s daily chart shows that an early decline as contained by buying interest around a horizontal 20 DMA, currently at 11,744, while the Momentum indicator heads nowhere within positive territory and the RSI indicator turned flat within positive territory after correcting overbought conditions, all of which limits chances of a steeper decline. In the 4 hours chart, the index broke below its 20 SMA, but bounced from a bullish 100 SMA, while technical indicators also lack directional strength, but hold within negative territory, indicating that the index needs to regain the 11,900 level to confirm that the bullish trend remains firm in place.
Support levels: 11,828 11,781 11,737
Resistance levels: 11,865 11,902 11,945
