EUR/USD
The unwind of the ‘Trump trade’ gathered momentum this Monday, resulting in the EUR/USD pair rallying to a fresh yearly high of 1.0905 at the beginning of the US session. Risk aversion dominated the Asian and European sessions, after the US GOP decided to pull out the healthcare bill set to overhaul the Obamacare late Friday. Speculative interest is now wondering if the US new administration will be able to push forward its pro-growth agenda, promised during the campaign.
The common currency gapped lower at the weekly opening, further rallying after London’s opening after the release of a better-than-expected German IFO confidence survey, which showed that than business sentiment unexpectedly improved in March, up to 112.3 from a previous 111.1, the highest reading since mid 2011. The US released a minor report, the Dallas Fed manufacturing index, which fell in March to 16.9 from previous 24.5, while a Fed’s Evan hit the wires, adding nothing new on monetary policy to what the market already knew.
The dollar recovered some ground in the US afternoon as Wall Street bounced from fresh six-week lows, but overall remains subdued, and at risk of falling further. The 4 hours chart for the EUR/USD pair shows that the price is well above the 1.0820/30 region, the 50% retracement of the post-US election’s decline and former yearly high, while the 20 SMA keeps advancing below it. Technical indicators in the mentioned chart have lost upward strength, pulling modestly lower within overall readings, not enough to suggest further declines ahead. Buying interest is likely waiting in the mentioned 1.0820/30 region, although a break below it could result in a slide down to 1.0790, where the pair will fill the weekly opening gap.
Support levels: 1.0765 1.0730 1.0700
Resistance levels: 1.0830 1.0870 1.0910
USD/JPY
The USD/JPY pair tumbled to a fresh yearly low of 110.10 this Monday, undermined by a continued decline in worldwide equities that fueled demand for the safe-haven yen. Trump’s defeat on his healthcare bill fueled demand for Treasury bonds, which sent yields lower at the beginning of the day. The 10-year note yield fell to 2.36% before recovering modestly to end the day in the red anyway at 2.38%. The yield of the two-year note traded as low as 1.236%, before also recovering modestly. Nevertheless, the pair is intrinsically bearish, now trading below the previous yearly low of 110.62, the immediate resistance. In the 4 hours chart, the price remains well below its 100 and 200 SMAs, with the shortest crossing below the largest but both still lagging amid the strength of the latest bearish move, whilst technical indicators have lost their upward strength after correcting oversold readings, indicating that the current advance is just corrective. The pair has a major support at 109.90, the 50% retracement of the late 2016 rally, and a break below it should see the bearish momentum accelerate this Tuesday.
Support levels: 110.30 109.90 109.50
Resistance levels: 110.65 111.00 111.45
GBP/USD
The GBP/USD pair traded as high as 1.2614, its highest in almost two months, before pulling back to settle around 1.2565. There were no macroeconomic news in the UK, with broad dollar’s weakness leading the way higher. UK PM Theresa May is expected to trigger the Brexit process next Wednesday, March 29th, and ahead of the announcement, met with Scottish PM Nicola Sturgeon. Sturgeon has called for a second Scotland independence referendum, against May’s will, but the terror attack from last week has interrupted the tense relations between them both. After officially lunching the Brexit, the UK will have two years to negotiate new arrangements, after which it will no longer be subject to EU treaties. The latest downward corrective movement has not been enough to confirm an interim top in the pair, as it would take a break below 1.2535, the 23.6% retracement of the January´s rally to see it falling further. In the 4 hours chart, the price is also developing above a bullish 20 SMA, whilst technical indicators have retreated within positive territory, with the Momentum nearing 100, but the RSI around 67, this last losing downward strength and pretty much indicating limited selling interest at the time being.
Support levels: 1.2535 1.2500 1.2465
Resistance levels: 1.2585 1.2620 1.2660
GOLD
Spot gold closed the day higher at $1,255.78 a troy ounce after peaking at a fresh 1-month high of 1,260.95, retreating in US trading hours as risk aversion eased partially, but with the dollar anyway beaten by the Obamacare repeal bill’s failure. With two more US Fed rate hikes priced in, the commodity seems poised to extend its recovery, as the FOMC no longer weighs on gold while political woes seem to be only beginning across the world. The daily chart for the commodity shows that the price managed to extend above its 200 DMA for the first time since late October 2016, while technical indicators have barely lost their upward strength within overbought territory, rather reflecting diminishing volumes at the end of the day than suggesting upward exhaustion. In the shorter term and according to the 4 hours chart, the risk remains towards the upside, as the price is well above a bullish 20 SMA, now the immediate dynamic support at 1,248.95, whilst technical indicators have resumed their advances within positive territory after correcting overbought conditions.
Support levels: 1.248.95 1,240.90 1,233.25
Resistance levels: 1,263.80 1,272.80 1,283.10
WTI CRUDE
Oil prices fell this Monday, with West Texas Intermediate crude oil futures ending the day at $47.69 a barrel. The commodity edged lower, despite oil producers pledged to extend their output cut deal past June during a weekend meeting. Russia was the only country that assisted to the meeting but said it needs more time before making a decision. The US benchmark bounced after retesting last week low of 47.07, but anyway maintains the bearish bias, as in the daily chart, the 20 DMA is now crossing below the 200 DMA far above the current level, the Momentum indicator eases its recovery below the 100 level, while the RSI indicator turned back south around 30, all of which supports additional declines towards the 45.00 region. In the 4 hours chart, the price is below its 20 SMA, although the indicator has lost is bearish slope and turned horizontal, whilst technical indicators have recovered within negative territory, but remain below their mid-lines, limiting chances of an upward corrective movement.
Support levels: 47.00 46.40 45.90
Resistance levels: 48.30 48.80 49.50
DJIA
Wall Street tumbled at the opening, with the three main American indexes falling to fresh six-week lows amid declines in overseas equities led by risk aversion. Fears that US President Donald Trump won’t be able to deliver the growth agenda that includes tax reforms and infrastructure investment arose after the GOP had to pulled out the healthcare bill last Friday. Equities trimmed most of their intraday losses as concerns eased modestly, and the Nasdaq Composite managed to close in the green, up 11 points to 5,840.37. The Dow Jones and the S&P, however, closed in the red, with the first shedding 46 points to 20,550.91 and the second closing at 2,341.59, down 0.10%. The Dow closed in the red for eighth consecutive session, with the worst performer being Chevron that fell 1.48%, followed by Goldman Sachs that shed 1.39%. El du Pont was the best performer adding 1.27%, followed by Pfizer that gained 0.68%. The daily chart for the Dow shows that technical indicators decelerated their declines near oversold readings, but also that the benchmark posted a lower low and a lower high below a bearish 20 DMA, all of which maintains the risk towards the downside. In the 4 hours chart, the index remains below a sharply bearish 20 SMA, currently providing a dynamic resistance at 20,614, while technical indicators have bounced within bearish territory, but present limited upward strength, in line with the loner term perspective.
Support levels: 20,528 20,467 20,409
Resistance levels: 20,614 20,648 20,707
FTSE 100
The FTSE 100 settled at 7,293.50, down 0.59% or 43 points, but off its daily low of 7,254. Distrust on Trump’s ability to activate the growth agenda promised after his victory sent investors away from high yielding assets. A stronger Pound also weighed on the Footsie, and within the benchmark, mining-related equities led the decline, as base metals fell on the continued unwind of the Trump trade, with Antofagasta being the worst performer, down 4.70%, followed by Glencore that shed 4.38%. Next led advancers, up 2.47% followed by Centrica that added 1.43%. Technical readings in the daily chart favor additional declines, as the index stands further below its 20 SMA, the Momentum indicator holds flat around 100, while the RSI indicator heads south around 45. In the 4 hours chart, the 20 SMA has crossed below the 100 SMA above the current level, while the Momentum indicator failed to surpass its 100 level before resuming its decline, and the RSI indicator consolidates around 38, all of which maintains the risk towards the downside.
Support levels: 7,284 7,254 7,220
Resistance levels: 7,319 7,357 7,392
DAX
European equities extended their decline at the beginning of the week, following the lead of their Asian counterparts. The German DAX shed 67 points and settled at 11,996.07, although it recovered above the 12,000 level in after-hours trading, amid Wall Street’s bounce from intraday multi-week lows. Industrial and utilities-related equities led the decline within the German benchmark, with RWE AG losing 1.78%, followed by Heidelberg Cement that lost 1.38% and ThyssenKrupp that closed down 1.33%. Infineon Technologies was the best performer by adding 0.53%. Despite the early intraday decline, the daily chart for the DAX shows that it settled above a bullish 20 SMA, whilst the Momentum indicator holds neutral around its mid-line and the RSI indicator turned lower, but holds at 56, limiting chances of further declines. In the shorter term and according to the 4 hours chart, the index is biased higher, as it’s currently trading above its 20 and 100 SMAs, both around 11,980, while the RSI indicator aims higher around 52 and the Momentum also advances modestly above its mid-line.
Support levels: 11,976 11,928 11,880
Resistance levels: 12,055 12,091 12,139
