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EUR/USD: just waiting for the ECB

EUR/USD Current price: 1.0732

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The EUR/USD pair has traded flat around the current 1.0720/30 region ever since the day started, mute after the release of German Industrial production figures for October, up by 0.3% monthly basis against expectations of a 0.8% advance. September 2016 was revised to -1.6% from previous -1.8%, while the year-on-year reading came in at 1.2%, in line with market's expectations. Investors are on hold ahead of the ECB meeting that will take place this Thursday. The Central Bank is largely expected to maintain rates and the monthly amount of bond purchasing unchanged, but is also expected to extend its QE program beyond March 2017.  The US calendar will be quite light today, with the JOLTS job openings for October and the Consumer Credit Change for the same month.

From a technical point of view, the short term outlook is neutral, as in the 1 hour chart, the technical indicators are flat within neutral territory, while the price is a few pips above a now horizontal 20 SMA. In the 4 hours chart, a bullish 20 SMA leads the way higher, now advancing above the 23.6% retracement of the latest daily fall at 1.0690. In this last chart, the RSI indicator has turned modestly higher within positive territory, while the Momentum retreated sharply from overbought levels, rather reflecting the absence of directional strength than supporting a downward move.

Support levels:  1.0690 1.0650 1.0610

Resistance levels: 1.0775 1.0810 1.0850

GBP/USD Current price: 1.2612

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The GBP/USD pair plunged to 1.2577, correcting half of the gains achieved on hopes for a softer Brexit. The Pound took a  hit from worse-than-expected UK data. Manufacturing output fell sharply in October, down by 0.9%, while Industrial production fell by 1.3%, the biggest fall in overall production in over three years. Also released today, the UK Halifax report showed that house prices in the three months to November were 6.0% higher than in the same three months of 2015, in line with market´s expectations.  The pair bounced from the mentioned low, currently trading a few pips above the 1.2600 mark. Nevertheless, the pair remains below the 38.2% retracement of the mentioned advance at 1.2625, the immediate resistance, and in the 1 hour chart, the price is well below a bearish 20 SMA, while technical indicators have barely corrected oversold readings, but hold deep within bearish territory. In the 4 hours chart, the 20 SMA has turned horizontal far above the current level, while technical indicators have partially lost their bearish strength, but remain within negative territory. The pair needs to break below the mentioned low to extend its slide further, with the next bearish target at 1.2530.  

Support levels: 1.2625 1.2660 1.2700

Resistance levels: 1.2575 1.2530 1.2490

USD/JPY Current price: 114.08

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Still unable to attract investors. The USD/JPY pair continues trading around the 114.00 level, unable to find direction. A light calendar in Japan, alongside with expectations of a US rate hike next week, have pushed away investors from the US data-sensitive pair. Still, the price is holding not far from the multi-month high posted at 114.82 last week, and the risk remains towards the upside in the long run, particularly if the Federal Reserve actually moves its main benchmark. The technical picture is neutral, with the 100 SMA now flat around 114.00, also the 23.6% retracement of the Abenomics rally between 2011 and 2015, while technical indicators head nowhere around their mid-lines. In the 4 hours chart, technical indicators seesaw in a limited range above their mid-lines, while the 100 SMA continues advancing below the current level, in line with further gains in the longer term. Deeps towards the 112.80 level are seen as buying opportunities, albeit an upward extension through 114.90 is required to confirm a bullish extension towards the 116.60 price zone.

Support levels: 113.65 113.20 112.80

Resistance levels: 114.20 114.55 114.90

AUD/USD Current price: 0.7446

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The AUD/USD pair plunged during the past Asian session, as the Q3 GDP released showed that the Australian economy shrank by 0.5%, below and already pessimistic forecast, and the steepest decline since the global crisis of late 2008, extending its decline down to a daily low of 0.7417. The pair recovered some ground in the European morning, supported by a strong rally in local equities, but the pair seems unable to hold on to gains beyond the 0.7450 Fibonacci resistance. Technically, the pair is bearish as in the 1 hour chart, the price is pressuring a bearish 20 SMA while technical indicators have turned lower within bearish territory. In the 4 hours chart, the technical outlook is neutral, with the price a few pips below the mentioned 0.7450 Fibo, and the 20 SMA and technical indicators heading nowhere around their mic-lines.

Support levels: 0.7420 0.7375 0.7330

Resistance levels: 0.7465 0.7500 0.7540

Author

Valeria Bednarik

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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