EUR/USD
The EUR/USD pair closed the week a 1.0620, with the American dollar down on Friday, despite Fed’s Yellen pretty much confirmed a March hike. The head of the US Central Bank spoke about the US economic outlook at the Executives Club of Chicago, and said that policymakers are ready to act at their next monetary policy meeting, if employment and inflation stay in line with officers expectations. She also added that two more rate hikes this year are likely, as the bank is now working to prevent the US from overheating. The US also released encouraging macroeconomic figures last Friday, as the ISM non-manufacturing PMI rose to 57.6, the highest since April 2015, from 56.5 in January. The Markit services PMI on the other hand, was revised slightly lower to 53.8 from a flash reading of 53.9 and 55.6 in January.
The American currency retreated on profit taking ahead of the weekend, as Yellen pretty much confirmed what Fed’s members have been anticipating all through the week, particularly ahead of the release of the US Nonfarm Payrolls report this Friday. Also, the common currency found some support on news that French far-right leader Marine Le Pen was summoned by a judge Friday over allegations of misusing European Union funds.
The EUR/USD pair recovery was enough to trim previous week’s losses, but not enough to confirm further gains ahead, or even to confirm a bottom, as the price has been unable to extend beyond the 1.0630 region for a third consecutive week. The daily chart shows that the recovery stalled below a sharply bearish 20 SMA, whilst the Momentum indicator has turned flat around its 100 level, failing to enter positive territory, whilst the RSI hovers around 43. In the 4 hours chart, technical readings support a short-term bullish continuation, as the price broke higher pass its 20 and 100 SMAs that anyway maintain their bearish slopes, whilst technical indicators hold well above their mid-lines, barely paring their advances ahead of the weekly close. The recovery can extend up to the critical 1.0700/20 price zone, although strong selling interest is expected to surge around this last, if reached.
Support levels: 1.0590 1.0565 1.0520
Resistance levels: 1.0635 1.0660 1.0710
USD/JPY
The USD/JPY pair closed the week with strong gains around 114.00, but pulled back on Friday from 114.74 as the dollar eased against all of its major rivals. The USD/JPY pair has been trading in a well-limited range ever since early February, with the upside capped by 114.55, the 23.6% retracement of the November/December bullish run. On Friday, Bank of Japan Deputy Governor Hiroshi Nakaso said that the current policy framework offers the flexibility and sustainability to achieve the BOJ’s "strong commitment" to raising inflation to a goal. Dollar’s strength ever since Donald Trump won the US elections has taken some steam off the Central Bank as the JPY weakened, although the uptick in inflation has been quite shallow so far. From a technical point of view, the daily chart shows that the price has recovered above a bullish 100 DMA, now the immediate support at 113.50, but also that technical indicators lack upward strength, and hover within neutral territory. In the 4 hours chart, technical indicator have pulled down sharply from overbought levels, with the Momentum poised to enter negative territory, whilst the 100 and 200 SMAs converge at 113.25, providing a not so strong support due to the lack of directional strength. February’s high stands at 114.95, and the pair needs to settle above it to be able to shrug off its negative tone.
Support levels: 113.50 113.25 112.90
Resistance levels: 114.55 114.95 115.30
GBP/USD
The USD/JPY pair closed the week with strong gains around 114.00, but pulled back on Friday from 114.74 as the dollar eased against all of its major rivals. The USD/JPY pair has been trading in a well-limited range ever since early February, with the upside capped by 114.55, the 23.6% retracement of the November/December bullish run. On Friday, Bank of Japan Deputy Governor Hiroshi Nakaso said that the current policy framework offers the flexibility and sustainability to achieve the BOJ’s "strong commitment" to raising inflation to a goal. Dollar’s strength ever since Donald Trump won the US elections has taken some steam off the Central Bank as the JPY weakened, although the uptick in inflation has been quite shallow so far. From a technical point of view, the daily chart shows that the price has recovered above a bullish 100 DMA, now the immediate support at 113.50, but also that technical indicators lack upward strength, and hover within neutral territory. In the 4 hours chart, technical indicator have pulled down sharply from overbought levels, with the Momentum poised to enter negative territory, whilst the 100 and 200 SMAs converge at 113.25, providing a not so strong support due to the lack of directional strength. February’s high stands at 114.95, and the pair needs to settle above it to be able to shrug off its negative tone.
Support levels: 113.50 113.25 112.90
Resistance levels: 114.55 114.95 115.30
GOLD
Gold bounced on Friday from a fresh 2-week low of 1,222.80, but closed the week with strong losses, with spot at $1,234.15 a troy ounce, bearing anyway pretty well with dollar’s strength and the possibility of a March rate hike in the US. The bright metal has been under pressure ever since topping at 1,263.79 at the beginning of the week, undermined by Fed’s officers rhetoric, supporting a rate hike as soon as this March, reiterated on Friday by head’s Yellen. The bright metal settled above the 50% retracement of the post-US election slump, at 1,230.00, although in the daily chart the price is below a now horizontal 20 DMA, after failing to surpass the 200 DMA, whilst technical indicators present a downward slope, but so far hold above their mid-lines, indicating an increasing bearish potential. In the 4 hours chart, the 20 SMA has turned sharply bearish above the current level and is about to cross below the 100 SMA, while technical indicators have managed to recover from oversold readings, but turned flat within bearish territory.
Support levels: 1,230.00 1,222.80 1,210.90
Resistance levels: 1,238.60 1,245.50 1,255.20
WTI CRUDE
West Texas Intermediate crude oil futures closed the week with modest losses at $53.20 a barrel, recovering on Friday from a fresh 3-week low of 52.53, as the dollar eased against all of its major rivals. Oil was also supported by news coming from the OPEC as early reports of February compliance suggest the organization was close to the 100% in the month. On the downside, the oilfield company Baker Hughes reported that the number of active drilling rigs rose for a seventh consecutive week, up by 7 to a total of 609. From a technical point of view, the daily chart shows that the commodity closed below a horizontal 20 DMA but above a modestly bullish 100 DMA, this last around 51.50, while the Momentum indicator remains flat around its 100 level, and the RSI heads modestly higher around 46, all of which limits chances of a steeper recovery. In the 4 hours chart, the price is well below all of its moving averages, with the 20 SMA having already crossed below the 100 SMA and now converging with the 200 SMA at 53.40, and technical indicators heading nowhere within negative territory, in line with the longer term perspective.
Support levels: 52.50 51.90 51.40
Resistance levels: 53.70 54.20 54.80
DJIA
US equities closed modestly higher on Friday, with the Dow Jones Industrial Average up 2 points, to 21,005.71. The Nasdaq Composite added 9 points and closed at 5,870.75, while the S&P ended at 2,383.12, 0.05% higher. Financial-related equities soared on Yellen’s comments about a possible rate hike this March, if employment and inflation continue within FED’s expectations. Within the Dow, Caterpillar was the best performer, up 0.81%, followed by Merck & Co that added 0.76%. Nike led decliners, shedding 1.90%, followed by Wal-Mart that closed 1.03% lower. The DJIA daily chart shows that it held far above a bullish 20 DMA, while the Momentum indicator heads sharply lower within positive territory, and the RSI consolidates at 77, correcting part of the extreme overbought readings reached in the week. In the 4 hours chart, the index hovers around a bullish 20 SMA, while the RSI indicator consolidates around 54, but the Momentum indicator heads sharply lower within negative territory, anticipating a downward corrective move on a break below 20,934, Friday’s low and the immediate support.
Support levels: 20,934 20,882 20,827
Resistance levels: 21,064 21,114 21,164
FTSE 100
The FTSE 100 closed at 7,374.26 on Friday, down daily basis by 8 points or 0.11%, but firmly higher weekly basis and at record highs. Investors were cautious ahead of speeches from US key policymakers, including FED’s head Janet Yellen. A weaker Pound provided support to local equities, although plummeting WWP dragged the benchmark lower. The world’s largest advertising company closed down 7.95%, topping losers’ list after reporting a sharp decline in its revenue growth. Fresnillo was also among the worst performers, down 2.89%. Old Mutual led advancers adding 1.81%, followed by Standard Live that closed 1.75% higher. Ahead of the weekly opening, the index retains the positive tone, although with no upward strength, as it holds above a bullish 20 DMA, but technical indicators turned modestly lower, the Momentum around its mid-line and the RSI at 66. In the 4 hours chart, the index remains well above a strongly bullish 20 SMA, whilst technical indicators retreated from overbought readings, supporting a downward corrective move on a break below Friday’s low at 7,352.
Support levels: 7,352 7,320 7,287
Resistance levels: 7,397 7,420 7,450
DAX
European equities closed in the red on Friday with the German DAX down 32 points to 12,027.36. In the region, banks were among the best performers, while commodity-related equities led declines. Despite Friday’s poor performance, the DAX ended above 12,000 its highest weekly settlement since April 2015. Commerzbank topped winners’ list, up 4.14%, followed by RWE AG that added 1.36%. Deutsche Bank was the worst performer, down 5.45%. The bank supervisory board is meeting on Sunday to discuss a $8.5B capital raise, after announcing on Friday that its planning an equity offering and the sale of part of its asset management unit after failing to find a buyer for its Postbank consumer business. Technically, the daily chart shows that the benchmark remains firmly above all of its moving averages, while the Momentum indicator holds above its 100 level, lacking certain directional strength and the RSI indicator retreats partially from overbought readings. In the 4 hours chart, the 20 SMA maintains a sharp bullish slope well below the current level, while technical indicators are pulling back from overbought territory, favoring a short term downward correction, particularly on a break below 11,989.
Support levels: 11,989 11,938 11,867
Resistance levels: 12,053 12,100 12,148
