EUR/USD: dollar's strength back in fashion

EUR/USD Current price: 1.0561

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The American dollar traded mixed in a quiet London session, but is currently gaining upward momentum across the board, with the EUR and the JPY still under strong pressure. The EUR/USD pair remained contained by 1.0630 ever since Draghi's announcement to extend QE to  December 2017, with some twists in the self-imposed rules on bond buying, and a decreased amount of monthly easing to €60B per month between April and December 2017. The pair resumed its decline after finally breaking below the 1.0600 figure, and fell so far down to 1.0554,  steadily approaching to the year low posted this December at 1.0504.

The macroeconomic calendar had little to offer during the European session, with only the German trade balance, showing a lower-than-expected surplus released. According to the official report, October's trade balance surplus was of €20.5B in October, from a previously revised €21.1B. Exports grew by 0.5% from previous -1.0%, while imports rose by 1.3% beating expectations of 1.0%. During the upcoming US session, the most relevant release will be the preliminary December Michigan Consumer Sentiment Index, expected at 94.5 from previous 93.8.

From a technical point of view, the 1 hour chart favors a continued slide as the price is accelerating its slide below a bearish 20 SMA whilst technical indicators head strongly lower, with the RSI indicator already within oversold territory. In the 4 hours chart, technical indicators head lower within bearish territory, although with limited strength due to the short intraday range. Also, the price was unable to surpass its 100 SMA, while the 20 SMA accelerated its decline above this last.

Support levels:  1.0550 1.0505 1.0460

Resistance levels: 1.0590 1.0630 1.0660

GBP/USD Current price: 1.2591

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The British Pound enjoyed a modest recovery during the first half of the day, advancing up to 1.2620 against the greenback during the London morning, helped by an improvement in the UK's trade balance, as the deficit on trade in goods was £9.7 billion in October 2016, narrowing by £4.1 billion from September 2016. Dollar's demand ahead of Wall Street's opening, has pushed the GBP/USD pair down towards 1.2575, the 50% retracement of the latest daily bullish run. Short term and according to the 1 hour chart, the bearish potential has increased although a break below the mentioned support is required to confirm the slide, as the price is struggling around a still bullish 20 SMA, while the Momentum indicator remains flat above its 100 level and the RSI resumed its slide, now around 46. In the  4 hours chart, the 20 SMA heads strongly lower above the current level, whilst technical indicators are losing their upward strength within bearish territory, supporting the shorter term outlook.

Support levels: 1.2575 1.2530 1.2490

Resistance levels: 1.2625 1.2660 1.2700

USD/JPY Current price: 115.10

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Fresh highs, little in the way until 116.00. The USD/JPY pair jumped to a fresh 11-month high above the 115.00 region, driven but renewed dollar's demand. The pair has spent most of the week stuck around 114.00, now that dovish ECB is out of the way, market's attention is now focused on the upcoming FED meeting next Wednesday, when the US Central Bank is expected to rise its main benchmark by at least 0.25bps, fueling the pair. Short term, the 1 hour chart shows that technical indicators have decelerated their advances within overbought territory, whilst the 100 and 200 SMAs are turning modestly higher well below the current level. In the 4 hours chart, technical indicators also lack upward strength, but hold within positive territory whilst the 100 SMA advanced up to 112.80. The pair has little in the way up to 116.00, where multiple weekly lows from 2015 will probably contained the upside ahead of the mentioned FOMC meeting.

Support levels: 114.90 114.55 114.20

Resistance levels: 115.30 115.65 116.00

AUD/USD Current price: 0.7446

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The AUD/USD pair rallied up to 0.7495 this Friday, with the antipodean currency underpinned by an upward surprise in Chinese CPI figures for November. Inflation gathered pace, surging by 0.1% monthly basis, pushing the year-on-year figure up to 2.3%. The Producer Price Index surged by 3.3% against previous 1.2% and the expected 2.2%. Nevertheless, the pair retreated once again from the key 0.7500 region, and is poised to extend its slide, given that in the 1 hour chart, the price has broken below its 20 SMA, whilst technical indicators head lower around their mid-lines. In the 4 hours chart, the technical outlook is still neutral, with the price hovering around a flat 20 SMA, and technical indicators hovering around their mid-lines, with no clear directional strength. A daily ascendant trend line coming from December low of 0.7370 stands at 0.7430, the level to break to confirm a steeper slide for this Friday.

Support levels: 0.7430 0.7400 0.7365

Resistance levels: 0.7500 0.7540 0.7580