EUR/USD
The EUR/USD pair closed the day at the lower end of its daily range, with the American dollar closing the day mixed, but up against its European rivals. The common currency’s retracement was due to technical factors, as the pair was rejected from a major resistance area around 1.0710 tested earlier this week, although soft data coming from the EU also weighed. Industrial Production in the EU rose by less than expected in January, posting a modest 0.9% advance monthly basis, against expectations of a 2.0% advance, edging up 0.6% when compared to a year earlier. The German ZEW survey showed that the economic sentiment improved slightly, up to 12.8 from previous 10.4, while for the EU sentiment saw a largest improvement up to 5.6 from previous 17.1. In the US, however, things were a bit better, as the Producer Price Index for final demand increased 0.3% in February, seasonally adjusted, while on an unadjusted basis, it rose by 2.2% in the 12 months to February, the largest advance in almost five years.
Market is now focused on whatever the FED will offer this Wednesday, as the US Central Bank is largely expected to announce a 25bps rate hike, which is fully priced in at this point. Investors will therefore be looking for hints of what’s next on monetary policy whether to buy or sell the greenback.
Technically, the 4 hours chart presents an increasing bearish potential, as the price has pulled below a bullish 20 SMA, while now extending below a horizontal 200 SMA, whilst technical indicators head sharply lower, entering negative territory ahead of the Asian opening. The pair however, holds around 1.0630, and much of the upcoming direction will depend solely on market’s reaction to the Fed, with either a break below 1.0565, or above 1.0720 setting the tone for the rest of the week. Still, political uncertainty will likely kick in after the market settles, preventing the pair from advancing much in either direction, situation that will likely persist until the end of the summer.
Support levels: 1.0600 1.0565 1.0520
Resistance levels: 1.0660 1.0710 1.0755
USD/JPY
The USD/JPY pair closed the day marginally lower, still confined to a tight range ahead of the Fed’s monetary policy decision this Wednesday. The pair peaked at 115.19 early London, but quickly retreated, undermined by falling stocks and a modest retracement from 2017 highs in US Treasury yields. The 10-year note benchmark settled at 2.58% after flirting with 2.62% earlier this week. The Bank of Japan will also have its monetary policy meeting these days, early Thursday, but the pair’s direction will depend on the US Central Bank. From a technical point of view, the pair has been quite reluctant to advance, despite positive US data and central bankers’ promises, with the pair unable to settle above 115.00 for over a month. A spike up to 115.50 on Friday settled a critical resistance, as it would take a break above it to confirm a more sustainable recovery for the following sessions. In the 4 hours chart, the pair is pretty much neutral, as the price has bounced modestly from the 23.6% retracement of the latest bullish run, around 114.50, whilst technical indicators have gyrated higher, but remain below their mid-lines. A disappointing Fed could see the pair breaking through 114.00, opening doors for a slide down to 112.60.
Support levels: 114.50 114.15 113.70
Resistance levels: 115.10 115.50 115.85
GBP/USD
The GBP/USD pair fell to 1.2108, its lowest since early January when PM Theresa May announced the government’s decision to go for a "hard-Brexit," with the Pound undermined by the imminent launch of the Art. 50 of the Lisbon Treaty. In a short session late Monday, the House of Common cleared PM May´s way towards the Brexit, reverting the amendments voted in the House of Lords. Much of this decline is due to the fact that once the UK begins negotiations, things will be out of the UK control, and any benefit the kingdom could obtain from this divorce will depend mostly on the good will of the EU. In the data front, the Conference Board Leading Economic Index for the UK increased 0.4% in January 2017 to 113.5, but more relevant the UK will release its latest employment figures this Wednesday, with upward wage pressure expected to ease some, and the unemployment rate expected to remain unchanged at 4.8%. Technical readings in the 4 hour chart favor additional declines, as the intraday recovery was contained by selling interest around 1.2165 and a horizontal 20 SMA, whilst technical indicators have quickly turned south after a modest advance, with the RSI currently at 43, anticipating some further slides on a break below 1.2110.
Support levels: 1.2110 1.2070 1.2035
Resistance levels: 1.2165 1.2200 1.2245
GOLD
Gold prices attempted to advance this Tuesday, but were unable to sustain tepid intraday gains, with spot ending the day pretty much unchanged at $1,202.80 a troy ounce. The bright metal held steady as investors wait for the Fed’s monetary policy meeting outcome, currently trapped between in a rock and a hard place, as opposing to Fed’s decision to raise rates, which should result in the metal plunging, is the underlying political risk surrounding Europe and the US, something that usually benefits gold. Physical demand in India remains subdued, with prices down for fifth consecutive day in the country amid sluggish industrial demand. From a technical point of view, the risk is towards the downside, as the commodity posted a lower low and a lower high daily basis, whilst the 20 DMA keeps gaining bearish strength far above the current level and technical indicators in the daily chart remain near oversold readings, although lacking directional strength. In the 4 hours chart, the price kept hovering around a horizontal 20 SMA, whilst technical indicators have turned sharply lower after entering positive territory, with the RSI anticipating some further declines as the indicator stands at 41. The immediate support is the 50% retracement of the latest daily bullish run at 1,193.00, the level to break to confirm additional slides during the upcoming sessions.
Support levels: 1,197.10 1,188.20 1,180.50
Resistance levels: 1,210.00 1,218.50 1,226.70
WTI CRUDE
West Texas Intermediate crude oil futures fell to a fresh 2017 low of $47.08 a barrel, resuming its decline after Monday’s consolidation, undermined by news coming from the US, as the EIA drilling productivity report released late Monday points for further increases in shale production next April. Also, the OPEC´s monthly report said oil stocks rose in January some 280 million barrels above the five-year average, making it tough for the organization to curb prices and clear the worldwide glut that affected the market for over two years already. WTI finished the day around 47.70, and despite the oversold conditions seen in technical readings in the daily chart, with the RSI indicator still heading south around 21, the risk remains towards the downside, as in the same chart, an early advance was contained below the 200 SMA broken late last week. In the 4 hours chart, a bearish 20 SMA capped the upside, currently at 48.40, while technical indicators have lost their downward strength, but remain within negative territory, with the RSI currently at 24.
Support levels: 48.00 47.30 46.65
Resistance levels: 48.40 49.10 49.75
DJIA
Wall Street closed in the red, with the Dow Jones Industrial average shedding 44 points, to end at 20,837.37, its lowest settlement since March 1st. The Nasdaq Composite ended 19 points lower at 5,856.82 while the S&P closed at 2,365.45, down by 0.34%. Weakening oil prices weighed on stocks, while a cautious stance persisted ahead of the upcoming Fed´s meeting. Within the Dow, Nike led advancers, adding 1.26%, followed by Wal-Mart that closed 1.20%. Decliners were led by Chevron that closed 1.59% and El du Pont that shed 1.09%. The DJIA has been retreating ever since toping at all-time highs early March, now trading some 300 points below such high, barely a correction considering the 3,600 points rally that followed Trump’s victory. And while the upward momentum keeps fading, technical readings are far from confirming an interim top and further declines ahead, rather looking as a consolidative stage ahead of the next big catalyst. In the daily chart, technical indicators keep heading south, with the Momentum nearing its 100 level but the RSI still at 60, and the benchmark hovering around a bullish 20 DMA for a second consecutive day. In the shorter term, and according to the 4 hours chart, the risk is towards the downside, as the index kept developing below its 20 and 100 SMAs, both now converging around 20,880, the Momentum indicator retreating from its mid-line, and the RSI indicator hovering around 42.
Support levels: 20,852 20,817 20,777
Resistance levels: 20,880 20,922 20,978
FTSE 100
The FTSE 100 lost 9 points or 0.13% to close the day at 7,357.85, with banking and retail shares dragging the benchmark lower following news that the Brexit will be triggered this March. A weaker Pound was not enough to lift investors’ mood that rushed to take profits out of the table as the index holds near record highs. Prudential was the best performer, adding 3.03% after the company reported that its Asian business helped the group´s operating profits to rise 7% to £4.3bn. Pearson was the worst performer, down 2.90%, followed by financial equities, with Royal Bank of Scotland ending the day 2.53% and Barclays shedding 1.59%. The daily chart for the Footsie shows that it managed to hold above its 20 SMA that is losing its upward strength, and currently offering a dynamic support at 7,322, whilst technical indicators hold within positive territory, although with no directional strength. In the 4 hours chart, technical readings support an upward extension for this Wednesday, as the index bounced from a modestly bullish 20 SMA on an early slide, whilst technical indicators have regained their upward strength after a modest correction within positive territory.
Support levels: 7,322 7,306 7,262
Resistance levels: 7,397 7,420 7,450
DAX
The German DAX closed the day flat, down 1 point to 11,988.79, with most major European indexes closing the day marginally lower, tracking losses from their Asian counterparts. The Dutch election taking place this Wednesday, could be the less relevant within the region, but took its toll over local shares, as the anti-immigration Freedom Party is quite close in polls to the ruling conservative party. A surprise victory from populist Wilders could weigh on markets’ mood ahead of the FED and send European benchmarks lower this Wednesday. Most components closed down, although RWE AG added 4.30&, leading the advance. Adidas was the worst performer, down 2.47%, followed by Volkswagen that shed 1.58%. Banks closed in the red with Commerzbank and Deutsche Bank losing over 1% each. The index is technically neutral-to-bullish, as in the daily chart, an intraday decline was quickly reverted after it tested a bullish 20 SMA, whilst technical indicators have turned flat, with the Momentum around its 100 level and the RSI indicator at 59. In the 4 hours chart, the index is hovering around a horizontal 20 SMA, whilst technical indicators lack directional strength around their mid-lines, presenting a short term neutral stance.
Support levels: 11,961 11,909 11,857
Resistance levels: 12,018 12,067 12,100
