EUR/USD
The American dollar stands victorious against all of its major rivals, underpinned by the release of a much better-than-expected ADP report. According to the US survey, the private sector in the country added 298,000 new jobs during February, anticipating a strong Nonfarm Payroll report what in turn will raise odds of a Fed’s hike next week. Also, the ADP January reading was revised from 246K to 261K, whilst the unit labor cost during the last quarter of 2016 came in at 1.7%, beating expectations of 1.6%, and nonfarm productivity also remained unchanged at 1.3%, missing expectations of 1.6%.
Attention anyway, now shifted towards the ECB monetary policy meeting that will take place this Thursday. The Central Bank is largely expected to keep its bond buying program and rates at current levels, but Draghi’s words are expected to be more optimistic, reflecting the economic growth seen in the region ever since late 2016. The ECB is also expected to upgrade is growth and inflation forecast, although for the latest, revisions will likely be shallow. Unless Draghi announces the intention of rising rates from current negative levels, or tightening the easing programs, euro gains will likely be short-lived, should it gain on hawkish words.
From a technical point of view, the risk is clearly towards the downside, as in the 4 hours chart the price stands comfortable below 1.0565, a major Fibonacci resistance, while the 20 SMA has lost its bullish strength, now turning lower and converging with the 100 SMA in the 1.0590 region. Also, the Momentum indicator in the mentioned chart turned flat within negative territory, whilst the RSI indicator continues heading lower, reaching fresh 2-week lows at 40. Much of Thursday’s direction will depend on Draghi’s announcements, but in the case of a sudden recovery, the most that the pair can advance is up to 1.0700/20, where selling interest is aligned.
Support levels: 1.0520 1.0490 1.0440
Resistance levels: 1.0565 1.0600 1.0635
USD/JPY
The USD/JPY pair advanced up to 114.74 this Wednesday, paring gains at the so far monthly high, to settle around 114.50 at the end of the day, unable to confirm a break of a major Fibonacci resistance. The advance took place ahead of the release of the US ADP report, with many suspecting some leak in the middle. Nevertheless, the private employment survey fueled the pair’s advance, also underpinned by a sharp recovery in US Treasury yields. The rate-sensitive 2-year yield jumped to 1.36%, its highest since August 2009, on speculation the upcoming US Nonfarm Payroll report will be strong enough to back a Fed’s hike as soon as next week. The pair could extend its consolidation around current levels during the next session, ahead of the ECB meeting and the US employment report, this last, with more chances of affecting it. The price is hovering around the 23.6% retracement of the late 2016 rally, having been unable to settle above it since late January. In the 4 hours chart, the price is well above its moving averages that anyway remain directionless, whilst technical indicators are retreating modestly within positive territory, not enough to suggest an upcoming downward move. At this point, the pair needs to extend beyond 114.95, February 15th high to confirm additional gains ahead.
Support levels: 114.15 113.70 113.20
Resistance levels: 114.95 115.30 115.80
GBP/USD
The GBP/USD pair extended its weekly decline to a fresh 7-week low of 1.2138, undermined by broad dollar’s strength and the latest parliamentary decision regarding the Brexit, as late Tuesday, the House of Lords approved an amendment giving the Parliament a saying over the final Brexit deal. The government has quickly responded that they are not willing to let assembly frustrate the EU exit process, and hopes that the amendments will be reversed next week, when the bill will return to the House of Commons. The pair ends the day not far from the mentioned low, and remains at risk of falling further, given that the price is developing well below a firmly bearish 20 SMA in the 4 hours chart, with approaches to the indicator being quickly rejected and resulting in lower lows. In the same time frame, the RSI indicator has failed to correct higher and turned back south around 29, while the Momentum indicator heads nowhere well below its 100 level, reflecting the consolidation seen during the American session.
Support levels: 1.2130 1.2085 1.2040
Resistance levels: 1.2180 1.2220 1.2260
GOLD
Spot gold fell to $1,206.55 a troy ounce, its lowest in five weeks, to close the day around $1,209.60. News that the US private sector added far more jobs than expected last month reinforcing the case of a rate hike next week. The commodity has now retraced the 38.2% of the December/February recovery, and remains biased lower according to technical readings, with the next relevant support at 1,197.80, the 100 DMA. In the daily chart, technical indicators present sharp bearish slopes within negative territory, supporting a continued slide on a break below the mentioned daily low. In the shorter term, and according to the 4 hours chart, the bright metal is also biased lower, as the price stands now far below a bearish 20 SMA that has crossed below the 100 and 200 SMAs, whilst technical indicators consolidate within oversold readings, with no certain directional strength.
Support levels: 1,206.55 1,197.80 1,188.20
Resistance levels: 1,214.20 1,221.70 1,230.00
WTI CRUDE
West Texas Intermediate crude oil futures plunged to 50.04, the lowest in three months, ending the day around $50.20 a barrel. The commodity plunged this Wednesday after the EIA reported the ninth consecutive weekly advance that drove inventories to record highs. The US added 8.2 million barrels last week, lifting total commercial inventories to a record level of 528.4 million. News that oil production from Waha Oil Co, in Libya could be interrupted due to clashes in the country have barely affected oil. The bearish breakout of this year’s range has exacerbated the slide, and technical readings in the daily chart support some additional slides, as the price has broken below its 100 DMA for the first time since late November, whilst technical indicators present sharp bearish slopes within negative territory. In the 4 hours chart, technical indicators head south pretty much vertically in extreme oversold territory, overreacting to the decline amid the preceding tight range. The decline stalled at the critical psychological support of 50.00, and large stops should lie below the level, which means that if those got triggered, the bearish movement will likely continue.
Support levels: 49.60 48.85 48.20
Resistance levels: 50.80 51.50 52.20
DJIA
Wall Street closed mixed, with the Dow Jones Industrial Average down 69 points, to 20.855.73 and the S&P ending the day at 2,362.98, 5 points lower, but the Nasdaq Composite up 3 points, to 5,837.55. Energy-related equities led the decline as oil prices plunged, offsetting gains in the financial sector. Within the Dow, Caterpillar was the worst performer, down 3.00%, followed by Chevron that shed 2.13% and Exxon Mobil that closed 1.78% lower. Wal-Mart led advancers, adding 0.81%, although just 8 out of 30 components closed in the green. The Dow daily chart shows that it stands some points above bullish moving averages, but near the 20 DMA, currently at 20,792, an immediate dynamic support. The Momentum indicator extended its decline within bullish territory, while the RSI also heads lower, now around 63, leaving overbought territory, all of which supports some additional declines, particularly on a break below the mentioned SMA. In the shorter term, and according to the 4 hours chart, the index presents an increasing bearish potential, as the 20 SMA continued to cap the upside, whilst technical indicators remain within negative territory, with modest bearish slopes amid limited intraday volume, but with no signs of changing course in the near term.
Support levels: 20,833 20,794 20,738
Resistance levels: 20,899 20,950 21,017
FTSE 100
The FTSE 100 lost 4 points this Wednesday, ending the day at 7,334.61. Local shares were unable to attract buying interest, despite UK Treasury chief Philip Hammond outlined the budget, focused on boosting infrastructure spending. Construction and material-related equities outperformed, while financials recovered some of the ground lost earlier this week, although gains were offset by a strong decline in the mining-related sector. Worldpay Group was the best performer, advancing 4.84%, while Randgold Resources topped losers’ list, shedding 2.30%. The index pared losses a few points away from its 20 DMA, this last at 7,306 for this Thursday, whilst the Momentum indicator remains lifeless around its 100 level and the RSI indicator continues retreating from overbought levels within positive territory. Shorter term, the 4 hours chart shows that technical indicators resumed their declines within bearish territory, whilst the index held below a bearish 20 SMA, maintaining the risk towards the downside in the short term.
Support levels: 7,306 7,265 7,238
Resistance levels: 7,345 7,397 7,420
DAX
European equities advanced at the beginning of the day, but ease from their highs into the close, ending the session pretty much flat. The German DAX closed 1 point higher at 11,967.31, with sentiment undermined by Chinese trade balance data, showing the first monthly trade deficit in over three years. Within the DAX, Adidas was the best performer, adding 9.03% after the company projected a revenue growth between 11% and 13% and net income growth of up to 20% for this 2017. Banks recovered from the recent setback, with Commerzbank adding 0.99% and Deutsche Bank closing 0.56% higher. In the daily chart, the index remains above a bullish 20 DMA, currently at 11,877, while technical indicators remain flat, but within positive territory. In the 4 hours chart, the index was unable to recover above a bearish 20 SMA, whilst the Momentum indicator remains neutral and the RSI indicator turned lower around 46, limiting chances of a stronger recovery as long as the index remains below 12,000.
Support levels: 11,920 11,877 11,832
Resistance levels: 12,001 12,053 12,100
