EURUSD slips to its lowest level in 2018

• The euro recorded its largest decrease in more than six weeks. The currency fell 0.52% to 1.1976 as continued uncertainty surrounding the German government formation weighed on the pair. Positive consumer confidence data failed to give EURUSD a boost. European equities advanced across the board with the EURO STOXX 50 up 0.24% to 3,616.45.

• US indices gained for a fifth straight day with the S&P500 closing at a new record of 2,747.71. Investors are optimistic for the tax cuts impact and earnings releases that start this week. The 10-year treasury yield traded flat at 2.48%.

• Gold was little changed, closing at $1320.40. The active WTI crude oil contract rose 0.50% to $61.72 a barrel.  

Economic Calendar commentary

Germany’s industrial production rose 3.4% versus the estimated 1.8%, lifting the euro slightly higher earlier this morning. Euro area unemployment rate, scheduled for 11:00 CET, is forecasted to decrease to 8.7% from 8.8%. The calendar remains thin today with Canadian housing starts in the afternoon forecasted to retrace from previous record release to 240,000. JOLTS job openings (16:00 CET) are forecasted to rise to 6025K.

Chart of the day

NATGAS (Daily Timeframe)

The price of Natural Gas future (February) contract continued to bounce away off its 21-day moving average and rises towards a cluster of resistance represented by November’s low and the 38.2% Fibonacci retracement of September to December high to low move. A break of 2.90 should see the commodity trade up to a key resistance level by 2.9950. A break lower of 2.78 will see it resume its bearish path to test recent lows at 2.5620.

Technical Analysis

FTSEMIB (Daily timeframe)

FTSEMIB index broke above a sloping trendline and looks on course to test the 23000-key psychological level and recent multi-year high by 23133. The failure to complete a head and shoulders reversal pattern and bounce back above the neckline is extremely positive for bulls. Only failure to break above 23000 and a drop back below 22000 could see the index enter a consolidation phase.

EURUSD (Daily timeframe)

The EURUSD pair trades at its lowest in two weeks. The level to watch is between 1.1950-1.1960. if the pair drops below 1.1950-1.1960 we could see a pullback to 1.1900. EURUSD seems to be building a bearish correction within an uptrend. If the pair holds above 1.1960 it could resume strength to target again 1.2088.