12 Dec: Euro under pressure post-ECB. Stocks at all time highs – again. FOMC this week’s focus.

By | December 12, 2016

The Euro remained under pressure heading into the weekend as traders continued to disseminate the outcome of last Thursday’s ECB Meeting, with Mario Draghi’s dovish comments that the ECB would be active in the market for a long time to come not helping the cause. Also placing pressure on the downside were the ECB’s projected inflation figures, expected to be at 1.7% in 2019, well below the 2% target. In Italian banking jitters, the ECB supervisory board rejected a time extension for Monte Dei Paschi bank to raise further capital, seemingly beginning the end-game and setting in place the possibility for a full blown banking crisis, which would seem to keep the Euro under pressure for a long while to come. We shall see.  Elsewhere, the dollar was underpinned by the much better than expected Michigan Consumer Sentiment index, while the Yen was weaker, making new trend highs against the dollar and finally doing some catch-up play with US stocks, which headed to their 3rd consecutive all time record close. The metals were heavy, coming under pressure from the stronger dollar, while WTI was firm ahead of the weekend OPEC/Non-OPEC get-together.

Well, it is a busy week ahead but the only thing that counts will be the Fed’s Interest Rate Decision/Press Conference Statement and the forward economic projections. A rate hike is considered a foregone conclusion and the main interest will lie in the Fed’s growth outlook, which will provide a clue as to the chances of further rate hikes in 2017. Monday is relatively quiet, but other important points of focus this week will be the other central bank interest rate decisions from the BOE and the SNB (both Thursday), and ahead of that, the German CPI, UK CPI and China Retail Sales and Industrial Production that are due on Tuesday. Aside from the FOMC, Wednesday also sees the US Retail Sales Industrial Production and PPI. Australia gets a look-in on Thursday, with the monthly Unemployment figures and then later in the day the US CPI figures are due. Finally, Friday sees the EU CPI, the BOE Quarterly Bulletin and the US housing data. Keep an eye out for the oil price on Monday, which is likely to head higher following the weekend OPEC/Non-OPEC meeting and the agreement to cut production.  It is going to be volatile so stay alert! Good luck.

CURRENCIES
EURUSD: 1.0559
Res  1.0590  1.0630  1.0665
Sup  1.0530  1.0505  1.0460
USDJPY: 115.19
Res  115.35  115.50  115.80
Sup  114.80  114.30  114.00
GBPUSD: 1.2574
Res  1.2600  1.2620  1.2645
Sup  1.2550  1.2520  1.2500
USDCHF: 1.0168
Res  1.0215  1.0255  1.0300
Sup  1.0140  1.0115  1.0085
AUDUSD: 0.7449
Res  0.7480  0.7500  0.7520
Sup  0.7435  0.7415  0.7400
NZDUSD: 0.7134
Res  0.7150  0.7185  0.7220
Sup  0.7125  0.7100  0.7070
INDICES / COMMODITIES
S+P: 2261
Res  2260  2270  2280
Sup  2250  2240  2230
DJI: 19779
Res  19785  19850  19900
Sup  19700  19600  19500
ASX SPI: 5581
Res  5582  5600  5640
Sup  5540  5510  5474
GOLD: 1160
Res  1170  1180  1188
Sup  1156  1150  1140
SILVER: 16.86
Res  17.00  17.25  17.45
Sup  16.80  16.65  16.50
OIL (WTI): 51.44
Res  51.65  52.40  53.00
Sup  50.80  50.00  49.55

 

Indices/commodities
S&P Futures 2261

The S+P has made further strong gains in heading up to 2260 heading into the weekend. With blue sky ahead of us finding technical levels is going to be tricky, but with the momentum indicators all pointing higher I would not be standing in the way. Heading into Wednesday’s FOMC Meeting it would be of no surprise to see some profit taking, so a tight SL on long positions would be wise. As a word of caution, this is beginning to look awfully like a blow-off top to me. I would not go against it, but if this turns around, then the downside could be quick and ugly.sp

24 Hour: Neutral

Medium term: Neutral

 

                                         Resistance Support
2270 Minor 2240 Minor
2265 Minor 2230 Minor
2260 Minor 2220 Minor
2255 Minor 2210 Minor
2255 All time /Friday high 2200 Minor
DJI Futures 19779
Ditto S+P.dji
24 Hour: Neutral Medium term: Neutral

 

Resistance Support
20000 Minor 19500 Minor.
19950 Minor 19400 Minor
19900 Minor 19300 Minor.
19800 Minor 19200 Minor
19784 Friday high /All-time high 19100 Minor.
ASX SPI 5581

The ASX was unable to make too much progress on Friday and mostly traded a rangebound session (5540/70), until just ahead of the NY close when it popped above the 1 August high of 5568, to finish at 5581.

Given the look of the momentum indicators further gains seem possible, suggesting that we could see a run to 5600 and above, opening the way towards the August 2015 high at 5671 and the Fibo resistance at 5683.

On the downside, minor support lies at Friday’s 5540 low, ahead of 5525 and 5510. Back below 5500 could then see a run back towards 5475 although this looks unlikely. If wrong, then below here could see a run towards the 7 Dec low of 5447 and then to the 6 Dec low of 5422.spi

24 Hour: Mildly bullish

Medium term: Mildly bullish

 

Resistance Support
5683 (76.4% of 5730/4643) 5540 Friday low
5671 Aug 2015 high 5525 Minor
5540 Minor 5500 Minor
5600 Minor 5473 Minor
5571/68 Friday high/1 Aug high 5450 (23.6% of 5029/5681)
GOLD 1160

Gold headed lower on Friday, under pressure from the stronger US$ closing the week below 1160 and looking as though further losses lie ahead.

Support again arrives at the 1157 lows, but below which there is little to hold the price up until 1120. Beneath there would allow a move to 1100, a break of which could then see a run towards 1090 and even to 1050.  On the topside, as before, resistance will be seen at 1170, 1180, at the 5 Dec 1188 high and then again in the 1195/1200 area although this looks unlikely to be seen for a while. Given that the weeklies point lower I still prefer to trade strategically from the short side although the dailies may be looking to find a near term base, so some caution is warranted., Overall, with the dollar strength looking to persist the upside for Gold looks limited.gold

24 Hour: Neutral

Medium term: Prefer to sell rallies

 

Resistance Support
1199 (23.6% of 1337/1157) 1157 4 Feb low/5 Dec low/Friday low
1188 5 Dec high 1140 Minor
1180 7 Dec high 1130 Minor
1172 200 HMA 1122 (76.4% of 1046/1375)
1165 Minor 1108 28 Jan low
SILVER 16.86

As with Gold, Silver also traded heavily on Friday, breaking below 17.00 and falling to 16.80, with little bounce ahead of the weekend.

Given the strength of the dollar, it looks as though Silver could remain under pressure although the dailies currently remain supportive, so caution is warranted. If we do head lower, then below Friday’s 16.78 low could see another run back to Monday’s low of 16.48, a break of which could see another test of the 2 Dec low of 16.31. Under that would eventually open the way to the minor double bottom at 16.16 and possibly 16.00. On the topside, resistance will be seen at 17.00 and then again at the 17.23 recent highs. Although it looks as though it is going to struggle to regain this in the near term.silver

24 Hour: Prefer to sell rallies

Medium term: Neutral

 

Resistance Support
17.57 (50% of 18.98/16. 17) 16.81 Friday low
17.40 14 Nov high 16.68 6 Dec low
17.23 (38.2% of 18.98/16. 17)/7 Dec high 16.48 5 Dec low
17.15 Minor 16.31 2 Dec Low
17..00 Minor 16.16 25 Nov Low/23 Nov low
OIL (WTI) 51.44

In Vienna, over the weekend, 11 Non-OPEC agreed to cut production all-time high, by 562K barrels per day which should see the price stabilise and to possibly move higher at the opening on Monday.

Having finished the week on a positive note on Friday, at 51.45, in expectations of an agreement, further gains seem possible with little resistance seen ahead of the Dec 5 high, at 52.38. As we said before, WTI has made another weekly close at just above the long-term reverse head/shoulder neckline, potentially allowing for some strong gains in the weeks ahead. The formation, seen in the weekly charts below, would have an objective of 82.00 and given the building positive momentum seen in the dailies, further upside action looks very possible.

The downside will see bids at 51.00 and then on an approach to 50.00, and buying dips would now appear to be the plan, with a SL placed below 49.50. The whole deal depends on the agreement holding together, and if there are any signs of a crack in the adherence to the cuts in output, we could see WTI reverse sharply lower. Until then, trading it from the long side appears to be the plan.wti

24 Hour: Neutral

Medium term: Neutral

 

Resistance Support
54.00 Minor 50.83 Friday low
53.52 9 July 2015 high 49.58 8 Dec low
53.00 Minor 49.15 Minor
52.38 5 Dec high 48.55 (38.2% of 42.19/52.38)
51.63 Friday high 47.60 Minor

EURUSD: 1.0559

The Euro remains heavy following last week’s ECB meeting although in making a low of 1.0530 on Friday it has so far managed to hold above the 1.0504 low seen last Monday after the Italian referendum result.

That looks unlikely to last long though as the short term momentum indicators have turned sharply lower, while the dailies, which had been pointing higher have flattened out and seem to be giving up in attempting to maintain a constructive outlook. Given that there is little data due on Monday, it may be a session of consolidation but the overall theme remains one of looking to sell into strength as we prepare for Wednesday’s FOMC Meeting, at which a rate hike from the Fed seems a certainty. A break of Friday’s lows could see a quick decline back to last Monday’s Asian low of 1.0504 and further out, below 1.0500 would eventually open the way to the March 2013 low at 1.0461. Under here there is very little to hold the Euro up until we reach almost to parity (1.0070=61.8% of 0.8225(Oct 2000 low)/1.6037(July 2008 high)) and at some stage we seem destined to get there, and I suspect a fair bit lower in 2017. On the topside, minor resistance will be seen at 1.0580/90 and again at 1.0630. Looking to sell into near term strength seems to be the plan and given the minor bullish divergence seen in the hourly charts, we could yet see a squeeze to 1.0600 in order to do so.

24 Hour: Mildly bearish

Medium term: Prefer to sell rallies

 

Resistance Support
1.0700 Minor 1.0530 Friday low
1.0665 200 HMA 1.0504 5 Dec low
1.0650 Minor 1.0461 March 2015 low
1.0629 Friday high 1.0400 Minor
1.0590 Minor 1.0334 Jan 2003 low

Economic data highlights will include:

M: Monthly Budget Statement

T: German CPI/HICP, German/EU ZEW Economic Sentiment Survey, EU Unemployment (Q3), US NFIB Business Optimism Index, API Weekly Crude Oil Stock Inventory

W: EU Non-Monetary Policy Meeting, US Retail Sales, Capacity Utilisation, Industrial Production, PPI, FOMC Meeting/IR Decision Meeting, Forward Projections, Interest Rate Decision, Press Conference

T: EU Flash Mfg/Services/Composite PMIs, US Current Account, New York State Empire Mfg Index, CPI, Philadelphia Fed Mfg Survey, NAHB Housing Market Index Markit Flash Manufacturing PMI, Jobless Claims

F: German Wage Price Index, EU Trade Balance, CPI, US Building Permits, Housing Starts, Fed’s Lacker Speech, Baker Hughes Oil Rig Count

Meta Trader
EURUSD: 4 Hour

euro

euro1


USDJPY: 115.19

US$Jpy finally overcame the barrier seen ahead of 115.00 and headed to a new trend high of 115.36 on Friday, closing not too far from its high’s, and as long as the stock markets remain buoyant it would appear to have further upside ahead of it.

 The short term momentum indicators  are looking constructive so, now above 115.00,  further gains towards 115.50 would seem possible although that could prove very strong resistance given the major Fibo/Cloud levels, but a break of which then sees little to stop it heading to 116.00+ and eventually to 117.80 (76.4% of 121.05/98.94).

 The daily charts remain at overbought extremes so further corrections would not surprise, and this may delay any possible move to the topside. Also watch out for any possible correction to the US stock indices ahead of the FOMC Meeting, which if seen would likely weigh on US$Jpy.

Back below 115.00, minor support will be seen at 114.80/85 and then there is not too much ahead of Friday’s low of 114.00.  For the time being, a cautious stance is required although buying dips looks to be the plan but further out, heading into 2017, I suspect that we have further dollar strength ahead of us.

24 Hour: Mildly bullish

Medium term: Neutral – Prefer to buy dips

 

Resistance Support
117.00 Minor 114.80 Minor
116.50 Minor 114.30 Minor
116.00 Minor 114.00 200 HMA
115.85 9 Feb high 113.50 Minor
115.50 (61.8% of 125.85/98.94)/Weekly cloud top 113.11 8 Dec low

Economic data highlights will include:

M: Machinery Orders, Tertiary Industry Index, Machine Tool Orders

T:

W: Tankan (Q3), Industrial Production, Capacity Utilisation

T: Foreign Bond/Stocks Investment

F:

Meta Trader
USDJPY: Daily

yen

yen-1


GBPUSD: 1.2574

Sterling was choppy within a 1.2550/1.2620 range on Friday, closing at the lower end of it after being placed under some pressure from the weaker Euro and from ongoing Brexit concerns.

The daily and 4 hour charts both now look fairly flat so a cautious stance is required but with the weeklies pointing higher I still prefer to look for dips to buy into, as long as we stay above the rising trend support, now close by at 1.2520. Under there could bring about further weakness, taking Cable back to 1.2400/10 so keep stops tight below 1.2500.  A run back above Friday’s 1.2620 to could potentially open the way back to 1.2700 although if the dollar strength continues elsewhere, Sterling is going to find it hard to make further upside progress and buying it against the Euro or the Yen may be the better, medium term bet. Further out, if we do see a run above 1.2700, we would then see minor resistance at 1.2740 ahead of the 1.2774 trend high, beyond which, further sellers will arrive at the 100 DMA at 1.2785. Watch out for this week’s inflation data. A soft number will place further downside pressure on Cable (exp 0.2%mm, 1.2%yy).

24 Hour: Neutral

Medium term: Prefer to buy dips

 

Resistance Support
1.2774 6 Dec high 1.2552/48 Friday low /(23.6% of 1.1821/1.2774)
1.2700 Minor 1.2520 Minor
1.2645 100 HMA 1.2500 Minor
1.2620 Friday high/200 HMA 1.2480 Minor
1.2600 Minor 1.2410 (38.2% of 1.1821/1.2774)

 

Economic data highlights will include:

M:

T: UK CPI, PPI, RPI

W: UK Unemployment, Claimant Count

T: Retail Sales, BOE Interest Rate Decision

F: CBI Distributive Trends Survey, BOE Quarterly Bulletin

Meta Trader
GBPUSD: 4 Hour

gbp


USDCHF: 1.0168

US$Chf finally (and briefly) breached 1.0200 on Friday making a new trend high at 1.0213 before closing the week back at 1.1075.

Once again, a cautious stance is required on Monday with the hourly charts showing some minor bearish divergence. The 4 hourlies though point higher, suggesting that eventually we will see another test of 1.0200/10, above which we could then head on to 1.0250 and to 1.0300/25 at some stage. On the downside, minor support will be seen at 1.0140 and at 1.0120, and then below here at 1.0090/1.0100 although this looks unlikely to be seen again today. With the weekly charts still looking positive, we could eventually be in for a sterner test of 1.0200/1.0300, and then possibly higher heading into 2017.

24 Hour: Mildly bullish

Medium term: Neutral – Prefer to buy dips

                                                                

Resistance Support
1.0327 27 Nov 2015 high 1.0140 (38.2% of 1.0018/1.0213)
1.0300 Minor 1.0120 200 HMA
1.0255 22 Nov high 1.0092 (61.8% of 1.0018/1.0213)
1.0223 2 Feb high 1.0065 7 Dec low
1.0213 Friday high 1.0052  (23.6% of 0.9548/1.0213)

Economic data highlights will include:

M:

T:

W: ZEW Expectations

T: SNB Interest Rate Decision, Press Conference

F:

Meta Trader
USDCHF: 4 Hour

chf


AUDUSD: 0.7449

The Aud had a choppy end to the week, largely rangebound between 0.7435/95, before finishing in the middle and for the time being leaving the outlook unchanged.

Technically, the daily momentum indicators are now beginning to flatten out after having previously tilted towards higher levels, while the short term indicators look pretty flat. Another sideways session therefore looks possible, with resistance again seen at 0.7480 and then again at the 0.7495/05 level. Above here looks unlikely although further offers would arrive at 0.7520, which should be strong (200 DMA). On the downside, the initial support again lies at 0.7430 and then at 0.7400/10, a break of which could then head back to the recent support at 0.7360/70. Under there could then see a move towards 0.7335 and then to 0.7300/10 although this looks over the horizon in the near term.  As before, I prefer to trade from the short side, but without looking for too much today, or possibly tomorrow while waiting on the FOMC outcome and then Thursday’s jobs data to provide direction. .

24 Hour: Prefer to sell rallies

Medium term: Mildly bearish.

 

Resistance Support
0.7570 16 Nov high 0.7434 Friday low
0.7542 50% pivot of 0.7777/0.7310 0.7415/11 7 Dec low/5 Dec low
0.7522 200 DMA 0.7400 2 Dec Low
0.7507 8 Dec high 0.7363/61 24 Nov low/22 Nov low
0.7495 Friday high 0.7345 Minor

Economic data highlights will include:

M: China Foreign Direct Investment

T: House Price Index, NAB Business Conditions/Confidence, China Retail Sales, Urban Investment, Industrial Production

W: WBC Consumer Confidence, New Motor Vehicle Sales

T: Consumer Inflation Expectation, Unemployment

F:

Meta Trader
AUDUSD: 4 Hour

aud


NZDUSD: 0.7134

The Kiwi traded heavily on Friday, unable to fend off the US$ strength, in falling to a low of 0.7125 with little bounce into the weekend.

While the daily momentum indicators still look mildly constructive the short term charts are beginning to point lower, so another choppy session may lie ahead, once again largely contained within the 0.7100/0.7200 range although I prefer to err on the downside, looking for a break of 0.7100 at some stage. Below this, possibly unlikely today, would find buyers at 0.7085/90 and at the 5 Dec lows around 0.7070. Under there, look for another run towards 0.7035, where the 200 DMA previously propped it up

On the topside, minor resistance will now be seen at 0.7150, 0.7185, 0.7200 and then at the Fibo level of 0.7236 although this currently looks pretty safe. Once again, I am pretty neutral today, but possibly looking for a minor test lower. With little NZ data this week it will be the US Retail Sales and the FOMC that will provide the direction

24 Hour: Neutral Medium term: Prefer to sell rallies

 

Resistance Support
0.7236 (61.8% of 0.7400/0.6983) 0.7125 Friday low /200 HMA
0.7220 8 Dec high 0.7093 5 Dec low
0.7200 Minor 0.7085 Minor
0.7185 Minor 0.7068 5 Dec low
0.7150 Minor 0.7035 200 DMA

Economic data highlights will include:

M:

T: Manufacturing Sales

W:

T: Business PMI

F: Current Account

Meta Trader
NZDUSD: 4 Hour

nzd

The post 12 Dec: Euro under pressure post-ECB. Stocks at all time highs – again. FOMC this week’s focus. appeared first on FX Charts Daily.