EUR/USD
The common currency lost its January momentum by the end of the month, closing the week against the greenback flat a few pips below the 1.0700 level. Much of the so far modest dollar’s recovery came from US indexes soaring to all-time highs on renewed hopes that US President Trump, will boost growth and inflation. The measures announced during his first week at the office indicate that he is serious about implementing protectionist trade policies, as among other decisions, the withdraw the US definitively from the TPP deal. US data released on Friday indicated that confidence in the future is somehow stronger than economic growth, as the most positive figure was the final reading of the Michigan Consumer Sentiment index for January, up to 98.5 from previous estimate of 98.1 the highest since 2004. The Q4 GDP disappointed, give a 1.9% real growth in the three months to December, below the 2.2% expected and previous 3.5%. December Durable Goods orders drop 0.4% amid a surprising transportation orders decline, with the core reading, ex-transportation, up 0.5%, in line with market’s expectations.
During this week, attention will center on the FED’s meeting, although the BOJ, and the BOE will also have monetary policy meetings. As for the US Central Bank, no changes to the current rate of 0.50%-0.75% are expected, and given that there won’t be economic projections or a press conference, attention will focus in the statement, and clue it may offer on upcoming rate hikes. Also, the US will release its monthly job’s report on Friday.
From a technical point of view, the daily chart shows that the price retreated from a major resistance, the 100 SMA in the daily chart. Additionally, the pair closed the day a few pips below the 38.2% retracement of the November/January decline at 1.0710, but held above a bullish 20 SMA, whilst technical indicators in the mentioned chart retreated within positive territory, but so far give no signs of a downward continuation. In the 4 hours chart, the downward potential seems to be increasing, given that the price is now contained by a bearish 20 SMA, whilst indicators head modestly lower within bearish territory. Still, the pair is holding around a daily ascendant trend line coming from this month multi-year low of 1.0340, unable to confirm a break lower. A downward acceleration through 1.0650, is what it takes to confirm further slides for this Monday, towards the next Fibonacci support at 1.0565.
Support levels: 1.0650 1.0610 1.0565
Resistance levels: 1.0710 1.0740 1.0770
USD/JPY
The USD/JPY pair closed the week a handful of pips above the 115.00 level, underpinned by a surprise move by the BOJ as the Central Bank increased its buying of 5 to 10-year bond yields from ¥410B to ¥450B. The 10-year JGB yield dropped to 0.075% from previous 0.09%, whilst the 5-year yield fell to -0.10%. Also, supporting the pair this past week was a strong rally in equities, although gains were limited on Friday by soft US data. The pair has set a strong floor in the 112.50 region, from where it recovered strongly in the past two weeks, yet given that the recovery stalled below the high within both lows, at 115.60, the upward potential remains limited. In the daily chart, technical indicators head higher, but are still unable to enter bullish territory, whilst the 100 DMA keeps heading north below the current level, indicating that a break above the mentioned resistance could indicate further gains for the upcoming days. In the 4 hours chart, however, technical indicators have lost upward strength, now consolidating within positive territory, whilst the price stands above a still bearish 100 SMA, but below its 200 SMA, this last around 116.00.
Support levels: 114.50 114.00 113.60
Resistance levels: 115.35 115.60 116.00
GBP/USD
After rallying to a fresh monthly high of 1.2673, the GBP/USD pair retreated on Thursday, despite resilient UK economic data. The economy grew by 0.6% in the last quarter or 2016, according to the GDP estimate, beating expectations of a 0.5% advance, even accelerating in the second half of the year when compared to the first half. The Supreme Court ruled against the government in the case of the Parliament’s intervention in the Brexit date, but it was renewed dollar demand what weighed on the pair. The Bank of England will have a monetary policy meeting this week, mostly expected to be a non-event, as it seems too early for Carney to reverse the easing announced last August. Despite the retracement, the GBP/USD pair hasn’t lost completely its latest upward potential, given that it held above 1.2510, the 23.6% retracement of its latest bullish run. In the daily chart, the 20 DMA maintains a modest bullish slope around 1.2330, converging with the 50% retracement of the same rally, whilst technical indicators retreated from overbought readings, but remain within bullish territory. In the shorter term, and according to the 4 hours chart, the risk has turned towards the downside, as the pair is currently developing below its 20 SMA, whilst the Momentum indicator entered bearish territory, maintaining its bearish slope, and the RSI indicator turned lower around 52.
Support levels: 1.2510 1.2470 1.2425
Resistance levels: 1.2595 1.2635 1.2680
GOLD
Spot gold closed the week sharply lower at $1,190.87 a troy ounce, undermined by a spike in risk-appetite as speculative interest resumed the "Trump-trade" mid last week. The commodity fell to a weekly low of 1,180.49 last Friday, paring losses on the back of soft US data. A market report, showing that physical demand for gold declined to a seven-year low during 2016, and that the during the last quarter of the year the commodity reached its largest levels of oversupply in over a decade, also weighed on the commodity. From a technical point of view, the daily chart shows that the price retreated from a key resistance, a bearish 100 SMA, while also settling by the end of the week below its 20 SMA, suggesting an increasing bearish potential. In the same chart, indicators have continued retreating from overbought readings, currently hovering around their mid-lines, leaving gold at risk of falling further. In the 4 hours chart, the 20 SMA heads south above the current level, and after crossing below the 100 SMA, whilst technical indicators bounced from oversold readings, but remain within negative territory, with the RSI turning lower around 42, also suggesting an increased downward potential.
Support levels: 1,181.20 1,173.15 1,162.10
Resistance levels: 1,196.00 1,204.50 1,214.60
WTI CRUDE
Crude oil prices remained flat for a second consecutive week, with West Texas Intermediate futures closing a few cents above $53.00 a barrel. A surprise build in US stockpiles offset news that the OPEC compiled with the production cut announced last November during the first month of the year. Overall, the commodity remains neutral, within a tight 52-55 range. From a technical point of view, WTI maintains a neutral stance, although with the downside limited according to the daily chart, as the price stands around a horizontal 20 SMA, but well above a bullish 100 SMA. Technical indicators in the mentioned chart have turned lower within neutral territory, unable to provide clear directional clues. In the 4 hours chart, the price is stuck within a congestion of moving averages, all together in a $1 range, whilst technical indicators are also around neutral territory, with modest bearish slopes.
Support levels: 53.00 52.55 52.00
Resistance levels: 53.65 54.30 55.00
DJIA
US major indexes closed little changed last Friday, with the DJIA down 7 points, to 20,093.78 and the S&P down by 2 points at 2,294.69. The Nasdaq Composite managed to gain some, up by 5 points or 0.10% to 5,660.78, with equities weighed by soft Q4 GDP growth. Nevertheless, indexes closed near record levels achieved earlier in the week. Earnings reports will keep on coming during the upcoming days, and will set the tone for stocks, beyond FOMC announcement or the NFP report. Within the Dow, Microsoft was the best performer, up 2.35%, followed by Caterpillar that added 1.82%. Chevron on the other hand, led losers’ list down by 2.37%. In the daily chart, technical indicators have lost upward strength and turned lower, with the Momentum near its 100 level and the RSI barely retreating from overbought territory, whilst the benchmark remains well above a horizontal 20 SMA, indicating a limited downward potential. In the 4 hours chart, the Momentum indicator heads sharply lower, now nearing its mid-line, but the RSI indicator consolidates around 62 and the 20 SMA maintains a strong bullish slope, now providing an immediate dynamic support at 20,058.
Support levels: 20,058 19,999 19,950
Resistance levels: 20,106 20,150 20,200
FTSE 100
The FTSE 100 advanced 23 points on Friday, and settled at 7,184.49, not enough to enter positive territory weekly basis. The Footsie was held down by a strong Pound that rallied to fresh January highs this past week, with Friday’s advance supported by Tesco that closed 9.29% higher after announcing it will restart paying dividends and announcing the company reached a deal to buy food wholesaler Booker Group for £3.7 billion. Pearson on the other hand was the worst performer, down 2.41%. Technically, the daily chart shows that there was not much action this past week, with the benchmark confined to a tight range, below its 20 DMA and with indicators flat within neutral territory, maintaining the risk towards the downside. The weekly low was set at 7,130, the key support for the upcoming days as a break below it should lead to further losses. In the 4 hours chart, the technical picture is also neutral, with the benchmark confined around its 20 and 100 SMA, and technical indicators lacking directional strength around their mid-lines.
Support levels: 7,130 7,085 7,025
Resistance levels: 7,183 7,241 7,288
DAX
The German DAX closed last Friday at its highest since May 2015 at 11,814.27, despite losing 0.29% or 34 points last Friday, amid a decline in auto makers and energy-related equities. ThyssenKrupp was the best performer, up by 1.56%, with Deutsche Bank leading losers’ list, down by 1.53%, followed by Volkswagen that closed down 1.30% and Daimler that shed 1.20%. Solid earnings reports were behind the weekly gain, particularly after Spaniard Banco de Santander S.A.’s report. As for the DAX, the daily chart shows that the index holds well above its moving averages, with the shortest being the 20 DMA around 11,623, the Momentum indicator flat within positive territory, and the RSI indicator turning modestly lower around 69, not enough to confirm an upcoming downward move. In the shorter term, and according to the 4 hours chart, the bearish side is also limited, as the 20 SMA heads north around 11.724, whilst technical indicators consolidate well above their mid-lines.
Support levels: 11,796 11,757 11,694
Resistance levels: 11,833 11,891 11,945
