Daily market review by HY Markets

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732

EUR/USD

The EUR/USD pair closed the week at 1.0846 the lowest close since early March this year, as the American dollar outperformed all of its major rivals, except the British Pound, on the back of the result of US Presidential election, resulting in Donald Trump becoming the 45th president of the USA. The initial sell-off in the greenback, and worldwide stocks, was reverted on promises of policies aimed to boost growth, including tax cuts and huge infrastructure spending. Furthermore, markets are firmly believing that the FED will have to raise rates at a faster pace during 2017, to catch up with what are seen as inflationary measures. At this point, a December rate hike seems to be fully priced in, so whether the greenback will be able to extend its rally, or not, is up to the FED actually pulling the trigger, and supportive US macroeconomic data. During the upcoming days, attention will likely remain in Trump and any news on what to expect from his upcoming administration.

Technically, the pair stands at a major long term support, the 1.0800 region, as ever since April 2015, and with a few exceptions, strong buying interest has surged around the level, resulting generally in a recovery up to the top of the range that persists ever since, in the 1.1460 region. The ongoing turmoil and uncertainty, however, may result in another false downward breakout, with scope for the pair to test 1.0461, March 2015 low. For the upcoming days, and according to the daily chart, the risk is towards the downside, given that the price is developing far below all of its moving averages, whilst technical indicators present sharp bearish slopes within negative territory. For the shorter term, the 4 hours chart also supports a downward extension as the RSI indicator consolidates near oversold reading, while the price stands near its daily low, and below a sharply bearish 20 SMA, now around 1.0950, after it crossed below the 200 and 100 SMAs.

Support levels: 1.0800 1.0760 1.0720

Resistance levels: 1.0865 1.0910 1.0950

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733

Friday 18 November 2016

EUR/USD

The dollar resumed its advance this Thursday, sending the EUR/USD pair to a fresh year low of 1.0629 in the US afternoon, fueled by comments from FED’s Yellen and strong US data that backed the case for a December hike. The greenback traded marginally lower during the past Asian session, but the downward momentum faded once the text of Yellen’s testimony on the economic outlook before the Joint Economic Committee, was released. The FED’s head offered her strongest comments ever supporting a rate hike, as she remarked that a rate hike could be ‘appropriate relatively soon,’ adding that keeping rates for too long my ‘undermine financial stability.’

Inflation in the US rose by 0.4% in October when compared to the previous month, beating expectations of a 0.3% advance, while the year-on-year figure advanced to 1.6% as expected. Core figures were slightly below expectations, but strong employment and housing figures released alongside, somehow neutralized any possible negative effect. Initial jobless claims for the week ended November 11th came in at 235K, the lowest level since November 1973, while housing starts surged to a 9-year high in October, up by 2.53% to a 1.32 million annualized rate.

The EUR/USD pair pressures its daily low by the end of the US session, overall poised to extend its decline, despite closing in the red for a ninth consecutive day. The daily chart shows that the pair continues posting lower highs and lower lows, while the RSI indicator maintains its bearish strength, despite being around 22, suggesting that upward corrective movements will probably continue to attract selling interest. Shorter term, the 4 hours chart also supports a downward extension, as an early advance was quickly rejected by a bearish 20 SMA, while technical indicators continue heading south near oversold levels, in line with a downward extension. The pair has an immediate support at 1.0640, with a break below it opening doors for a continued slide towards 1.0460, 2015 yearly low.

Support levels: 1.0600 1.0560 1.0505

Resistance levels: 1.0700 1.0755 1.0800
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734

Monday 21 November 2016

EUR/USD

The market kept buying the greenback for a second consecutive week, pushing the EUR/USD pair to a fresh year low of 1.0568 on Friday. Demand for dollar assets, triggered by Trump´s victory and hopes his growth policies will send inflation higher, sent the dollar index to its highest close since 2003, up 2.15% for the week at 101.32. FED’s Chair, Janet Yellen, said this past week that a rate hike could take place “relatively soon,” fueling dollar’s rally, alongside with positive local data, including the CPI that rose in October by 0.5% from a year earlier, at the fastest rate of growth in two years, whilst weekly unemployment claims fell to 235K, the lowest reading since November 1973.

Still, the movement seems quite overstretched, as the EUR/USD pair has fallen for ten days in-a-row, as a December hike has been fully priced in. A corrective movement should not be dismissed, although is yet to be seen if that could be enough to revert the dominant bearish trend. Technically, the daily chart shows that indicators maintain the strong bearish strength, despite being in extreme oversold territory, suggesting the pair may extend its slide, down to 1.0505 first, December 2015 monthly low, and 1.0460 later, the lowest for 2015. In the 4 hours chart, a bearish 20 SMA has been steadily rejecting advances for the last two weeks, while technical indicators are consolidating within negative territory, supporting a downward extension on a break below 1.0560, the immediate support.

Support levels: 1.0560 1.0505 1.0460

Resistance levels: 1.0640 1.0690 1.0720

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736

Wednesday 23 November 2016

EUR/USD

The EUR/USD pair continued trading within a tight range around the 1.0600, having extended its weekly advance by a few pips, up to 1.0657 as the dollar remained under moderate pressure, particularly during the first half of the day, amid a short-lived spike of risk aversion. Market’s sentiment turned sour after a 7.4 magnitude earthquake hit Japan at the beginning of the Asian session, fueling demand for safe-haven assets. Also, US elected President Donald Trump, outlined his plans for his first 100 days in office, announcing that he intends to withdraw the US from the Trans-Pacific Partnership deal, and seek for “fair, bilateral trade deals.” Wall Street however, was not concerned, with the DJIA surpassing the 19,000 benchmark for the first time ever, and the Nasdaq Composite extending to fresh record highs. The positive momentum in US stocks, prevented the greenback for falling further.

In the data front, there were no major macroeconomic releases in the Europe, although the EU preliminary consumer confidence index came in at -6.1 for November, better than the expected -7.8. In the US, existing home sales rose in October by a second consecutive month, up by 2.0%, while the Richmond FED Manufacturing index for November came in at 4, against previous -4.

From a technical point of view, the pair has made little progress, overall at risk of falling further given that it remains near this year’s low, set last Friday at 1.0568, with attempts to recovery meeting selling interest in the 1.0650 region. It seems that investors are waiting for a new trigger to resume dollar’s buying, rather than giving up on buying the greenback. In the 4 hours chart, the price is hovering around a bearish 20 SMA, while the 100 and 200 SMAs maintain their sharp bearish slopes well above the current level, and technical indicators aim modestly higher, but with no actual upward strength. Overall, the corrective movement can indeed extend up to the 1.0800 region, but unless the pair settles above 1.0840/60, the risk will remain towards the downside.

Support levels: 1.0590 1.0560 1.0510

Resistance levels: 1.0650 1.0690 1.0720

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737

Thursday 24 November 2016

EUR/USD

The American dollar firmed up early US session, rallying up to fresh yearly highs against the EUR, even before the release of better-than-expected US data, and in spite of European one, showing that economic activity expanded in the region. According to Markit preliminary November readings, the EU composite PMI is estimated to have been of 53.7 from previous 53.3, the strongest pace of growth so far this year. The German manufacturing sector expanded by less than expected, but posted a solid 54.4, while the Services PMI came in at 55.0, a six-month high.

In the US Durable Goods Orders surprised to the upside, up for fourth month in the last five, jumping 4.8% in October. The preliminary Markit Manufacturing PMI came in at 53.9, beating expectations of 53.4, while the Michigan Consumer Sentiment index printed 93.8, its highest in six months. On the downside, weekly unemployment claims rose to 251K in the week ending November 18, while New Home Sales fell in October, down by 1.9%. Finally, the FOMC released the Minutes of its latest meeting, showing that most FED officials saw a rate hike appropriate ‘relatively soon.’ The market barely react to the news, as it did not add nothing new to what the market already knew.

From a technical point of view, the pair is poised to extend is slide, given that it remains below the 1.0600 level, and below its moving averages in the 4 hours chart, with the 20 SMA offering an immediate resistance around the level. Technical indicators in the mentioned chart has posted a modest bounce within bearish territory, but clearly reflecting the lack of buying interest around the pair. A rate hike for December has been fully priced in, yet the greenback has not yet seen its top. December 2015 low is the immediate support, at 1.0505, with followed by March 2015 low of 1.0461.

Support levels: 1.0505 1.0460 1.0420

Resistance levels: 1.0590 1.0640 1.0675

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