EUR/USD: risk on ahead of US opening
|EUR/USD Current price: 1.0706
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Risk off flipped to risk on in a blink this Monday, sending the EUR/USD pair to its highest since mid November, up to 1.0729, after it fell to a fresh yearly low of 1.0504 at the beginning of the day. Italian referendum ended with an overwhelming victory of the "NO" to the Constitutional reforms proposed by PM Matteo Renzi, who decided to resign after the result. Fears that the Italian banking system could collapse and spread to other European banks generate risk aversion at the beginning of the day. Still, EU authorities rushed to down-talk the impact on the EUR and the European union. Data in Europe was generally encouraging with the services sector still growing at a fast pace in the region, according to final Markit PMIs readings. The final EU Composite PMI came in at 53.9, its highest in 11-month. European equities opened sharply higher, sending the pair up to the mentioned daily high, now steady above 1.0700 ahead of Wall Street's opening. The final US services and composite PMIs are going to be release in about an hour, alongside with the ISM Non-manufacturing PMI.
Technically, the 1 hour chart shows that the price established well above its moving averages, while technical indicators held within overbought territory, all of which maintains the risk towards the upside. In the 4 hours chart, technical indicators have lost upward strength, but hold well above their mid-lines, whilst the price accelerated well above its 20 and 100 SMAs, above this last for the first time since November 9th, also indicating that the pair may continue rallying, particularly if US data misses expectations.
Support levels: 1.0685 1.0650 1.0610
Resistance levels: 1.0730 1.0775 1.0815
GBP/USD Current price: 1.2721
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The GBP/USD pair fell down to 1.2624 at the beginning of the day, but recovered quite fast within the Asian session, and even extended its rally after London's opening to 1.2743 its highest in two months. The UK Markit services PMI came in at 55.2 in November, following October's 54.4, indicating that the UK economic growth remains firm. The pair, however, was unable to extend its gains beyond the mentioned high, but held above 1.2700. Technically, the 1 hour chart shows that a bullish 20 SMA keeps leading the advance, while technical indicators hold within positive territory, and the RSI turns higher around 62. In the 4 hours chart, technical indicators are retreating from overbought readings, but the 20 SMA maintains a sharp bullish slope below the current level, limiting chances of a steeper downward move. Furthermore, the quick recovery seen at the beginning of the day suggests that the market will continue to buy on deeps.
Support levels: 1.2670 1.2630 1.2595
Resistance levels: 1.2750 1.2785 1.2820
USD/JPY Current price: 114.31
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Back above 114.00, bullish. The USD/JPY pair surged strongly pass the 114.00 level, holding near a daily high of 114.47 following the strong opening of European equities' markets. The pair plummeted to 112.86 at the beginning of the day as risk aversion dominated the first session of the day following the Italian referendum. But sentiment changed course during the European morning, as different authorities from the region, including Germany's finance minister and the European Union's finance commissioner, Pierre Moscovici, said that there are no reasons to understand this referendum as the trigger for a new EU crisis. The pair is now short term bullish according to the 1 hour chart, as the pair met strong buying interest on a test of a bullish 100 SMA in the 1 hour chart, while technical indicators hold near overbought readings, with only the Momentum correcting modestly lower. In the 4 hours chart, the price continues developing well above its moving averages, although technical indicators have lost upward strength, with the Momentum within neutral territory, suggesting further gains are unlikely at this point.
Support levels: 114.00 113.65 113.30
Resistance levels: 114.45 114.90 115.30
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