Daily market review by HY Markets

Commercial Content Analysts
712

EUR/USD

The American dollar closed the week with a strong tone against most of its major rivals, underpinned by better-than-expected US inflation figures released on Friday. August CPI rose by 0.2% after being unchanged in the previous month, while the core monthly figure rose by 0.3%, compared to July. This week, the FOMC and the BOJ will have their economic policy meetings, and while investors expect the US Federal Reserve to leave rates unchanged, the pickup in inflation supported the case for a hike later this year. US Consumer confidence, according to the University of Michigan’s preliminary index, also released in the last trading day of the week, resulted unchanged at 89.8, slightly below market’s expectations.

After trading in a tight range of barely 80 pips, for most of the week, the EUR/USD pair finally broke lower, ending the week at 1.1153, not far from the three-week low posted on August 31st at 1.1122, a strong static support. The common currency remains resilient to dollar’s strength, in spite of the latest ECB’s decision to leave its economic policy unchanged, making of a bearish case a limited one at this point. The daily chart for the pair shows that it’s trading above a long term ascendant trend line, coming from 1.0505, November 2015 low, around 1.1050/60 for this upcoming days. In the same chart, the price is below its moving averages, which have been long missing directional strength, whilst technical indicators have turned lower within neutral territory, indicating that the risk is towards the downside. In the shorter term, and according to the 4 hours chart, the bearish potential is even clearer, as the Momentum indicator heads south well below its mid-line, while the RSI indicator consolidates around 28, and that the pair posted a long volume candle after breaking below its moving averages.

Support levels: 1.1120 1.1080 1.1040

Resistance levels: 1.1160 1.1200 1.1245

713

EUR/USD

The American dollar shed ground this Monday, as commodities and equities traded with a firmer tone during the first half of the day. Trading volume, however, was low amid a Japanese holiday, situation that extended all through the day due to a scarce macroeconomic calendar. With little news around and the FED and BOJ’s meetings around the corner, investors held in cautious mode. A minor economic release in the EU showed that the current account surplus in the area declined from €29.5 billion in June to €21 billion in July, putting at risk any growth’s perspective in the region.

The EUR/USD pair rose up to 1.1197, but pared gains after the release of US builders´ confidence data that surprised to the upside, with the NAB housing market index up to 65 in September, the highest in almost a year. The pair spent the rest of the American session consolidating a handful of pips below the mentioned high, maintaining a weak stance from a technical perspective and in the short term, as in the 4 hours chart, the price continues developing well below its moving averages, whilst technical indicators head modestly lower within negative territory, but off their early lows set in oversold levels. German PPI and US Housing starts will gather investors attention this Tuesday, although major breakouts will wait for Wednesday, with the release of the latest FOMC economic policy decision.

Support levels: 1.1160 1.1120 1.1080

Resistance levels: 1.1210 1.1245 1.1290

714

EUR/USD

The so long awaited BOJ and FED’s economic policies announcements ended up being a big disappointment for dollar bulls, as both Central Banks decided to leave their policies basically unchanged. The BOJ left rates at -0.1%, a move meant to protect banks, but decided to introduce an interest rate target for 10-year government bonds, in a way to control the yield curve. The US Federal Reserve, also left its key rates unchanged, but this time, there were three dissenters, up from one last time, somehow indicating that a rate hike is around the corner. In the press conference, Yellen reiterated that the case for a rate hike strengthened, also indicating that a rate hike is not far away. As for the FED’s ´dotplot´, it shows that policy makers are still expecting one more rate hike left for this 2016, and just two for 2017. Officers, however, cut their median growth projection for 2016 to 1.8% from 2%, mirroring the drop in the longer-run forecast, based on median estimates. Inflation is projected at 1.3% in the fourth quarter, down from a forecast of 1.4% in June.

The dollar initially plummeted across the board, with the EUR/USD pair reaching 1.1196 before retreating modestly ahead of the press conference. Yellen’s words, who said that they decided to leave rates unchanged due to labor market slack and low inflation, adding also that the economy has room to run, cast doubts over the pace of rate hikes, hurting any upward potential of the greenback. As for the technical picture, the EUR/USD pair did little progress, maintaining a neutral-to-bearish technical stance in its 4 hours chart, as indicators turned lower within neutral territory, while the price has been unable to advance above the 100 and 200 SMAs. Given the limited upward scope of the greenback, however, the pair may advance this Thursday, with a steady advance beyond 1.1200 required to confirm so.

Support levels: 1.1160 1.1120 1.1080

Resistance levels: 1.1200 1.1245 1.1280

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715

HY Markets
EUR/USD
The greenback extended its decline this Thursday, still pressured by FOMC’s decision to keep rates unchanged during their last meeting. Even through a December rate hike is a possibility, investors believe that policymakers are not yet ready to abandon the current accommodative stance and fully compromise with the tightening path. There were no macroeconomic releases in the EU, while in the US, data came in mixed, with weekly unemployment claims down to 252K for the week ending September 16, from the previous week’s unrevised level of 260K. Existing-home sales eased up in August for the second consecutive month, declining by 0.9% to a seasonally adjusted annual rate of 5.33 million in August from a downwardly revised 5.38 million in July.
The EUR/USD pair advanced up to 1.1257, a fresh weekly high, before pulling back during the US afternoon, nearing the 1.1200 ahead of Wall Street’s close. There was no catalyst behind this last intraday decline, except maybe the lack of follow-through forcing speculators to take some profits out of the table. The pair maintains a neutral stance, having stalled its advance below last week’s high of 1.1283, still the level to surpass to confirm more sustainable EUR gains. The 4 hours chart suggests that such scenario is becoming unlikely, as the technical indicators in the mentioned chart have turned sharply lower within positive territory from near overbought readings, whilst the price is now back around its 100 and 200 horizontal moving averages. While it is too early to call for a slide according to technical readings, further slides below the 1.1200 level will put the pair at risk of a downward extension towards the base of this week’s range at 1.1120.
Support levels: 1.1200 1.1160 1.1120
Resistance levels: 1.1250 1.1280 1.1335
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716

EUR/USD
The EUR/USD closed Friday at 1.1226, range bound for a fourth consecutive week. Since late August, the pair has been trading within a well-limited 200 pips’ range, with uncertainty ahead of the US Federal Reserve decision sending investors to the side-lines. Still, the Central Bank failed to set the tone for the pair, offering a mixed tone, as while it left doors open for a December hike, it also showed no rush in tightening rates. Things in Europe were not helping the bullish case for the common currency, as September preliminary Markit PMIs showed that the services sector activity fell to a 21-month low. Manufacturing on the other hand, improved, both for the EU and Germany, but that was not enough to outpace services’ reading, resulting in the EU Markit composite PMI falling to a 20 months low of 52.6 and the German reading falling to 52.7, the lowest in over a year.
For this upcoming week, the US will once again take center stage, with the release of PCE inflation, Durable Goods Orders, the final revision for the Q2 GDP figure, and at least nine FOMC members scheduled to speak.
The technical picture is neutral, as long as the price holds above 1.1120, but below 1.1366, August high. The pair continues developing within two large trend lines, with the longest being the ascendant one, coming from November 2015 low of 1.0505, and around 1.1080/90 for the upcoming days. As for the descendant trend line, it began at 1.1615, May 2016 high, and should offer some resistance if reached, currently around 1.1280. In the daily chart the price is above the moving averages, but the indicators remain all together and without directional strength, reflecting the absence of direction, while technical indicators hold within neutral territory. In the 4 hours chart, the pair presents a moderate bullish tone, as the price is above its moving averages, and technical indicators in positive territory, although losing upward strength.
Support levels: 1.1190 1.1160 1.1120
Resistance levels: 1.1250 1.1280 1.1335

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717

EUR/USD
The EUR/USD pair enjoyed some short term demand, rallying up to 1.1278 on Monday, before better-than-expected US housing data gave investors to reject the advance around a major static resistance level. As usual lately the week started in slow motion, with most majors trading in quite limited intraday ranges. New Home sales in the US slipped by less than expected in August, running at a 609,000 seasonally adjusted annual rate, down by 7.6% on the month when compared to July, against expectations of a 8.6% decline. Also, helping the greenback were comments from FED’s Lacker, an usual hawk, who said that the case for a December hike is strong. In the EU, Germany released its IFO survey showing that the business climate rose sharply in September, to 109.5 from 106.2 in August, with surged in both the current assessment and the expectations components.
As for the technical picture of the EUR/USD pair, it continued trading within its latest range, stalling its recovery around a major resistance level, a daily descendant trend line coming from this year high at 1.1615. The pair also has multiple intraday highs and lows around the 1.1280 region, and as long as the price remains below it, the upward potential will remain limited. Technical readings in the 4 hours chart are starting to show some divergences, as while the price remains above a sharply bullish 20 SMA that already advanced above the 100 SMA, the Momentum indicator heads south towards its mid-line, while the RSI indicator retreats from near overbought readings. Additional declines below 1.1225 will increase the risk of a bearish continuation for this Tuesday, with 1.1160 as a probable bearish target should the dollar strengthen steadily.
Support levels: 1.1225 1.1190 1.1160
Resistance levels: 1.1280 1.1335 1.1365
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718

HY Markets
EUR/USD
Trading was choppy around the EUR/USD pair this Wednesday, as investors were waiting for speeches from both, ECB’s Draghi and FED’s Yellen. None of them, however, broke fresh ground when it comes to economic policies, leaving the pair marginally lower, down for a second consecutive day. Federal Reserve Chair Janet Yellen, spoke before the House Panel on Bank Supervision, and her speech was focused on banking supervision and regulations. When asked about rates, she just mentioned that there is “no fixed timetable for rising rates.” As for Mario Draghi, he spoke about the current developments in the euro area, in Berlin, defending the ongoing Central Bank’s policies, stating also that negative rates are not to blame for the woes of the banking sector. In the macroeconomic front, the US released its Durable Goods Orders for August, which came in flat, compared to the previous month, at 0.0%. Bad news within the report showed that shipments of capital equipment declined for a fourth straight month, which will probably result in a downward revision of Q3 GDP estimates.
From a technical point of view, the EUR/USD pair continues making little progress this week, although the upward momentum seen last week keeps fading, as the pair posted a lower low daily basis. The 4 hours chart shows that the price was unable to recover above its moving averages, although the indicators remain mostly horizontal and confined within a 30 pips range, reflecting the absence of a clear trend, while the Momentum indicator in the mentioned time frame heads south below its 100 level and the RSI indicator consolidates around 47, leaning the scale towards the downside. Renewed selling interest below 1.1190, could see the pair extending its decline down to 1.1120 during the upcoming sessions, a strong static support.
Support levels: 1.1190 1.1160 1.1120
Resistance levels: 1.1245 1.1280 1.1335
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719

EUR/USD
The American dollar closed last week firmly up against all of its major rivals, helped by a flash crash in the British Pound early Friday. Still, the greenback was supported by generally encouraging local data released at the beginning of the week, that indicate that the US economy keeps growing at a steady pace. On Friday, the long awaited employment report came in a little lower than expected, but it was not enough to deny the case of a December rate hike. In September, the US created 156K new jobs, against 172K expected, the unemployment rate ticked up from 4.9% to 5.0%, whilst average earnings figure rose less than expected, but in line with average readings, up 0.2% MoM and back to 2.6% YoY. The EUR/USD pair seesawed after the release, but ended up recovering from a twomonth low printed at the beginning of the day at 1.1104, to end the day a handful of pips below the 1.1200 level, trapped within the same range for a sixth consecutive week. The absence of directional conviction among investors has deepened after both Central Banks moved to the sidelines, and market’s attention is now on the second US presidential debate, late Sunday night, as a possible catalyst for some USD moves. Technically, the pair remains trapped between two longterm trend lines, with the longest being the ascendant one, this week around 1.1090/1.1100. In the daily chart, the price is hovering around horizontal moving averages, while indicators are within neutral territory, while in the 4 hours chart, technical indicators have recovered from oversold readings and pared gains around their midlines, while the price is above its 20 SMA, but below the 100 and 200 SMAs. Overall, the risk remains towards the downside, as long as selling interest surges in the 1.1245/1.1280 region.

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Support levels:1.1160 1.1120 1.1080

Resistance levels: 1.1245 1.1280 1.1335

720

EUR/USD

The week started once again in slow motion, as in addition to the usual quietness of Mondays, there were bank holidays in Japan, the US and Canada. The main theme of the day was the US second presidential debate that took place late Sunday, although it had a limited impact on the FX board, resulting, however, USD supportive. Before the first debate, US candidates were head to head, but at this point, Hillary Clinton seems to have taken the lead back, emerging victorious from the two debates according to the media. US polls, said she is leading now by around 5%. Stocks benefited the most, with European equities closing firmly higher. There was little in the calendar, although Germany released its August trade balance data, showing that the foreign trade balance recorded a surplus of €22.2 billion in August 2016, while exports increased by 9.8% and imports by 5.3% in the mentioned month, on a yearonyear basis. Also, sentiment in the EU improved according to the Sentix Confidence Index, which printed 8.5 in October from 5.6 in September. As for the EUR/USD pair, it slowly but steadily moved lower all through the day, contained by selling interest in the 1.1200/10 region, and nearing the base of its latest range ahead of the Asian opening. The technical picture is increasingly bearish, given that in the 4 hours chart, the price has faltered around its 100 and 200 SMAs before extending its decline below a now bearish 20 SMA. Technical indicators in the mentioned time frame maintain downward slopes within negative territory, supporting a bearish extension, despite the limited momentum, this last due to reduced volumes.

Support levels:1.1120 1.1080 1.1040

Resistance levels: 1.1160 1.1205 1.1245
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721

WTI CRUDE

Crude oil prices retreated from the multimonth highs posted this Monday, in spite of positive news coming from the International Energy Agency, as the organism said that oil market may rebalance much faster if the OPEC and Russia agree to reduce production, although the agency also said that is unclear how long it would take. West Texas Intermediate crude futures traded as low as $50.38, but settled a few cents below 51.00, indicating some profit taking, probably triggered by dollar’s strength, rather than suggesting that the bullish move has reached a top. From a technical point of view, the daily chart shows that the technical indicators have retreated from near overbought readings, but remain above previous weekly lows, whilst the 20 SMA keeps heading north below the current level, all of which limits chances of a steeper decline. In the 4 hours chart, the commodity has met buying interest around its 20 SMA, while technical indicators have turned higher from their midlines, also indicating that buying interest outpaces selling one.

Support levels:50.30 49.40 48.70

Resistance levels:51.60 52.20 53.00

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722

EUR/USD

The dollar remained firm after Tuesday’s rally, extending its gains against the common currency to the highest in over twomonths, as the EUR/USD pair fell down to 1.1004, early US session and ahead of the release of FOMC Minutes. The Pound was an exception, outperforming on news that UK Prime Minister May has accepted that Parliament should vote on her plan for exiting the EU. At the beginning of the day, the Eurozone industrial production surprised on the upside in August up August by 1.6% when compared to July, while compared to August 2015, it rose by 1.8%, beating expectations and due to production of durable consumer goods rising by 4.3%, capital goods by 3.5%, energy by 3.3% and intermediate goods by 1.4%. Despite the figure shows a strong bounce in growth from July’s poor figures, the common currency remained under selling pressure. FOMC’s Minutes disappointed as usual, as whilst several voters thought that rates should rise “relatively soon,”, they also said that a reasonable case could be made for both, hiking and waiting. Also, a substantial majority saw risk roughly balance, although low inflation cast doubts over the upcoming hike. A clearly split FED and more uncertainty surrounding the timing of the so long awaited rate hike. The market barely reacted to the news, with the EUR/USD pair bouncing modestly from its daily low, and technically poised to extend its decline, as in the 4 hours chart, the 20 SMA has extended its downward move to converge now with the long term daily ascendant trend line broken earlier this week, a line in the sand for the ongoing downward move. In the same chart, technical indicators have lost their downward strength, but hold within oversold readings. Adding the fact that the pair is near the critical 1.1000 level, further slides are likely on a break below the psychological figure.

Support levels:1.0990 1.0960 1.0920

Resistance levels: 1.1045 1.1080 1.1120

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723

EUR/USD

The EUR/USD pair closed the week at its lowest in over two months, and not far from July’s low of 1.0951, on continued dollar’s demand amid firming expectations of another rate hike in the US before the yearend. Risk appetite came back early Friday, as fears over a Chinese economic slowdown receded following betterthanexpected local inflation data. Further supporting the greenback was a modest uptick in US retail sales in September, up by 0.6% compared to August, matching expectations. The core figure, exautos, came in at 0.5%, beating expectations of a 0.4% reading. Also, the producer price index was slightly firmer than expected up 0.7% yearonyear basis, and by 0.3% in September from previous 0.0%. Dollar’s momentum continued in spite of a downward surprise in Michigan’s consumer sentiment index that plunged to 87.9 from previous 91.2 in October, it’s lower in over a year, attributed to the contentious presidential election campaign. During this upcoming week, attention will center on US September CPI figures, as a pickup, particularly in core readings, will further increase hopes of a FED’s hike. Additionally, the ECB is having an economic policy meeting, although no new announcements are expected from the ECB, largely expected to maintain the focus on QE’s implementation. As for the technical picture, this last week’s decline has left daily indicators in oversold readings, but with a strong downward momentum, indicating that the pair may extend further it’s decline before pulling back some in correction mode. In the same chart, the price has finally moved away from the congestion of moving averages that anyway persists around 100 pips above the current level. In the 4 hours chart, the 20 SMA heads sharply lower, offering a dynamic resistance around 1.1025 for this Monday, while the Momentum has turned flat within bearish territory, after failing to overcome its midline, while the RSI indicator heads south around 26, also supporting additional declines. The immediate support is the mentioned July low at 1.0950, followed by the postBrexit low, at 1.0910.

Support levels:1.0960 1.0910 1.0860

Resistance levels: 1.0990 1.1025 1.1060

724

EUR/USD

Most major pairs held within relatively narrow ranges this Monday, with the EUR/USD pair unable to recover firmly above the 1.1000 level, but holding around it by the end of the US session. The greenback was weighed by a series of disappointing macroeconomic releases, as the New York Empire State manufacturing index printed 6.8 in October, against the 1.0 expected, or previous 1.99. Industrial production rose a seasonally adjusted 0.1% in September, matching expectations, after dropping 0.5% in August, although the capacity of utilization printed 75.4% less than the 75.6% expected. In Europe, the release of final September inflation readings passed unnoticed, as the figures matched expectations, with the YoY reading at 0.4%. The pair has posted a fresh over twomonth lows at the beginning of the day, down to 1.0963 early Asia, and maintains the negative tone, particularly in the short term, as the intraday advance seems merely corrective. Despite the data, and last week’s comments from Yellen, odds of a US rate high remain roughly at 65% for December, and the market is not ready to give up on the greenback. Technically, the 4 hours chart shows that the 20 SMA has eased its bearish momentum above the current level, but still caps the upside a few pips above the current level, while the technical indicators have been in consolidative mode within negative territory. The immediate support is 1.0951, July’s low, followed by 1.0910, the postBrexit low.

Support levels:1.0950 1.0910 1.0860

Resistance levels: 1.1025 1.1060 1.1100

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725

EUR/USD

The EUR/USD pair fell down to 1.0915, a stone’s throw away from the post-Brexit low of 1.0910, after the ECB’s economic policy meeting. The Central Bank left rates and its monthly QE purchases of €80bn unchanged, while President Mario Draghi emphasized that they will continue with extraordinary policy accommodation as long as needed, and reiterated that “there are no signs yet of a convincing upward trend in underlying inflation.” During the Q&A session, the pair jumped to its highest for the week at 1.1038, as Draghi said that they didn’t discuss a QE extension, but a few minutes later, he added that they didn’t discuss tapering either, putting a halt to the early rally and resulting in the pair falling back. Draghi delayed any decision for December, when the Central Bank will have more data to make more accurate decisions.

Data coming from the US was generally positive, with seasonally adjusted initial claims up to 260K in the week ending October 15th, from a revised 247K. The 4-week moving average was 251,750, an increase of 2,250 from the previous week’s revised average. The Philadelphia FED Manufacturing survey for October, print 9.7, below previous 12.8 but above market’s expectations of 5.3, while existing home sales surprised to the upside in September, up by 3.2% to a seasonally adjusted annual rate of 5.47 million.

The pair bounced modestly from the mentioned low, but so far has been unable to recover above 1.0950, July’s low and the immediate short term resistance, still looking quite vulnerable according to intraday technical readings and pointing to test the base of the wide long term range between 1.0840 and 1.1460. Seems unlikely the pair could break below the 1.0800/40 region without a major catalyst, but is possible that the region will be tested during the upcoming days. Technical readings in the 4 hours chart maintain the risk towards the downside, as the price was unable to settle above a still bearish 20 SMA, while technical indicators have barely bounced from oversold readings, without real strength.

Support levels: 1.0910 1.0870 1.0840

Resistance levels: 1.0950 1.1010 1.1055

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726

EUR/USD

The American dollar started the week moderately pressured against its major rivals, but changed course and recouped the ground lost early in the US session, following the release of a better-than-expected October preliminary manufacturing PMI. According to the report, US manufacturers recorded the strongest upturn in business conditions for 12 months, as the PMI rose from 51.5 to 53.2. Europe also seems to have started the fourth quarter in a strong fashion, as the EU composite PMI for October jumped from 52.6 to 53.7, the highest reading this year. In the EU, growth was boosted by a sharp advance in German figures, with only the French services PMI falling below expected, down to a 3-month low of 52.1. Still, the imbalance between Central Banks’ economic policies, weighed mode, preventing the common currency from advancing.

The EUR/USD pair closed the day flat around 1.0880, having met selling interest on an advance up to the 1.0900 level, retaining the bearish tone seen on previous updates. Technically, the 4 hours chart shows that the price is well below a bearish 20 SMA, currently at 1.0910, the immediate resistance and the level to surpass to see the pair attempting an upward extension. In the same chart, the Momentum indicator heads higher within bearish territory, but the RSI indicator has turned back south around 33 after correcting extreme oversold readings, in line with further slides, particularly on a break below 1.0840, a strong static long term support.

Support levels: 1.0840 1.0800 1.0760

Resistance levels: 1.0910 1.0950 1.1010

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727

EUR/USD

After falling to a fresh multi-month low of 1.0850, the EUR/USD pair bounced back mid American session, although the recovery was one again contained by selling interest around the 1.0900 figure. The pair has been trading within a tight 50 pips range ever since the week started, and in spite of some interesting headlines released this Tuesday, the pair was unable to leave it. Firstly, Germany released its IFO survey which showed that business sentiment rose to the highest in over two years in October, as the index climbed to 110.5 from previous 109.5, indicating that the German economic recovery keeps gathering momentum. The common currency, however, was unable to attract buyers after the release.

As for the US, the S&P house price index showed that that home prices continued their rise across the country over the last 12 months up by 5.1% in August when compared to a year earlier. Consumer confidence in October, on the other hand, fell to 98.6 from a previously revised 103.5, although the report remarks that "sentiment is that the economy will continue to expand in the near-term, but at a moderate pace.” Also, ECB’s Draghi spoke at the German Institute for Economic Research in Berlin, said that the central bank would certainly prefer not to have to keep interest rates “at such low levels for an excessively long time,” acknowledging the cost of its ultra-loose monetary policy.

Overall, the dollar remains strong, particularly against its European rivals and the yen, despite the intraday setback triggered by the decline in consumer confidence. While the EUR/USD pair may correct higher from current levels, the bearish potential is still quite strong, with scope to break below the 1.0800 level and extend down to 1.0500/600. From a technical point of view and in the short term, the 4 hours chart shows that the price is standing a few pips above a bearish 20 SMA, while the RSI indicator bounced from oversold readings and the Momentum indicator entered positive territory with a sharp upward slope, supporting some short term gains on an extension beyond 1.0910, the immediate resistance.

Support levels: 1.0840 1.0800 1.0760
Resistance levels: 1.0910 1.0950 1.1010

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728

EUR/USD

The American dollar resumed its advance during the US session this Thursday, edging higher against all of its major rivals. The EUR/USD pair advanced intraday up to 1.0940, but ended the day below the 1.0900 level, not far from a daily low of 1.0882. The first series of US data was soft, with orders for capital goods declining by the most since February. Durable Goods Orders fell by 0.1% in September, against an advance of 0.1% expected, while the core reading, ex transportation, rose by 0.2% as expected. Jobless claims for the week ending October 21st were of 258K, slightly above expected, but holding near a multi-decade low. The dollar picked up momentum after the release of September Pending home sales that grew 1.5% when compared to August, and by 2.4% when compared to September 2015.

The US will release its first estimate of Q3 GDP on Friday, expected at 2.5% from previous quarter 1.4%, and the market will probably wait for the figure to decide whether or not to send the EUR/USD pair to fresh multi-month lows. Technically, the pair has pared gains once again a few pips below 1.0950, the 23.6% retracement of the latest bearish run between 1.1278 and 1.0850, the low set this week, preserving the dominant bearish trend. The 38.2% retracement of the same decline stands at 1.1010, and it will take a break above this last to consider an upward continuation. In the meantime, the 4 hours chart shows that the price is breaking below its 20 SMA, while technical indicators have turned sharply lower, with the RSI indicator already within bearish territory, all of which supports a new leg lower for this Friday.

Support levels: 1.0840 1.0800 1.0760

Resistance levels: 1.0910 1.0950 1.1010

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729

EUR/USD

The American dollar tread water against it major rivals by the end of last week, but suffered a setback after the FBI Director James Comey, announced on Friday that they would reopen probe into Hillary Clinton emails, on newly discovered material, “potentially pertinent” to the investigation. The bureau, however, has not yet gotten a search warrant to read them, according to news released over the weekend, and Comey has been strongly criticized for dropping such bombshell a few days ahead of the election’s date, next November 8th. The EUR/USD pair jumped to its highest for the week, printing 1.0991, closing a handful of pips below the level.

Data coming from both economies was quite encouraging, with the European Commission’s economic sentiment indicator for the Eurozone up to 106.3 in October from 104.9 in September, whilst German headline inflation in October came in at 0.8% YoY, from 0.7% in September. In the US, growth rebounded in the third quarter, as the advanced annualized GDP printed 2.9%, beating expectations and well above previous 1.4%. The upcoming week will be fulfilled with fresh data and Central Banks announcements, with attention centered in the FOMC and the BOE, this last, the one with more chances to actually act.

As for the technical outlook, the EUR/USD pair seems to have found an interim bottom at the low set last week at 1.0850, the base of the long term range set between 1.0840 and 1.1460 early 2015. The daily chart, however, shows that the price stalled its recovery right below a sharply bearish 20 SMA, and while technical indicators have left oversold territory and head north, are still within negative territory. Furthermore, the price is below 1.1010, the 38.2% retracement of its latest daily fall, and the level to beat to confirm further recoveries. In the shorter term, and according to the 4 hours chart, technical indicators have lost upward strength in overbought territory, while the price was unable to advance beyond a bearish 100 SMA, although with the price near its highs, a downward correction is not yet confirmed. As long as the price remains above 1.0950, the risk will be towards the upside this Monday.

Support levels: 1.0950 1.0910 1.0850

Resistance levels: 1.1010 1.1045 1.1090

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730

EUR/USD

The EUR/USD pair surged to a fresh 3-week high of 1.1068, with the dollar trading broadly lower across the board after a US Presidential poll, carried by ABC News/The Washington Post, showed that Donald Trump is one point above Hillary Clinton in voters’ intentions, pretty much attributed to last Friday’s announcement from the FBI to investigate new emails from Clinton. Macroeconomic releases coming from the US were strong, with the October Markit manufacturing PMI up to 53.4 the highest reading for this year. The ISM manufacturing PMI for the same month, resulted at 51.9, beating expectations of an advance up to 51.7. The negative note came from construction spending, down by 0.4% in September.

Despite upbeat US data that supports the case for a December hike and the upcoming FED meeting this Wednesday, the greenback risks further declines during the upcoming Asian session, as the negative sentiment towards the American currency will likely persists. From a technical point, the 4 hours chart shows that technical indicators are in extreme overbought, despite the pair barely added 100 pips daily basis, amid previous intraday limited ranges, which means that further gains are still possible. The pair needs to extend beyond the mentioned daily high to be able to do so, as it’s the 50% retracement of its latest decline. Activity is expected to fade during the upcoming Asian session and ahead of the FOMC meeting, which will determinate whether this bearish run in the greenback is sustainable or not.

Support levels: 1.1050 1.1010 1.0950

Resistance levels: 1.1090 1.1120 1.1160

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Thursday 10 November 2016

EUR/USD

Against all odds, Donald Trump has been elected as the 45th President of the United States of America, and surprisingly, the greenback also won, at least against the common currency and the dollar bloc. The American dollar and Wall Street began shedding ground early Asian session, when the first exit polls showed that Mrs. Clinton was not doing as well as expected, and plummeted once Trump´s victory was confirmed early London. The movements were in line with the magnitude expected by investors, although what nobody saw coming was that US stocks would trim all of those intraday losses and rally to fresh multi-month highs.

There’s still much uncertainty over both, the economic and political future of the US, not to mention how the FED will act from now on, which means that wild moves in a volatile environment are not yet over. However, there is a clear winner for this election, and it’s the Republican Party that now controls not only the Presidency, but also the House of Representatives and the Senate, which means the party will have a clear path when it comes to implement new policies. The question is, would Trump and its co-party members agree? The other winners of the day were US yields, as the 10-year benchmark reached 2.01%, while the 30-year yield rose above 2.80% in the American afternoon.

The EUR/USD pair soared to 1.1299, its highest in two months, but closed the day barely above the 1.0900 level, with the common currency additionally weighed by the European Commission decision to cut the EU and the UK growth forecast. According to the official report, growth would slow to 1.7% this year from 2.0%t in 2015 and decelerate further to 1.5% in 2017 before picking up again to 1.7% in 2018. The wild intraday ride in the pair has left technical readings partially distorted, although the risk is towards the downside, considering that the pair is at fresh two-week lows, and that it failed to hold on to gains above its daily MAs. Shorter term, the 4 hours chart shows that the price settled below all of its moving averages, and that technical indicators maintain their bearish slopes near oversold readings. The immediate support comes at 1.0910, with a break below it exposing the October low of 1.0850, en route to 1.0800.

Support levels: 1.0910 1.0850 1.0800

Resistance levels: 1.0950 1.1010 1.1060

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