Daily Commentary

Friday 24 March 2017

EUR/USD

European currencies saw little action this Thursday, holding within familiar  ranges amid a scarce macroeconomic calendar and the absence of a major catalyst. The EUR/USD pair settled at 1.0787, pretty much unchanged daily basis, having however, set a lower low and a lower high daily basis.  The market seems to have made a pause as the "Trump trade" is undergoing a major test, given that the Obamacare repeal bill is in the Congress. A positive vote from policy makers, may revive investors hopes, somehow paving the way for policies related with tax cuts and growth. 

Germany releases the GFK consumer confidence survey for April early London, showing that sentiment eased as the survey resulted at 9.8 from previous 10.0, with rising inflation denting buying power. In the US, weekly unemployment claims rose in the week to March 17th to the highest in seven weeks, printing 258K against expectations of 240K and previous revised 243K. New Home Sales, on the other hand, surprised to the upside, rising by 6.1% in February to a seasonally adjusted total of 0.592M. Attention this Friday will center in March preliminary PMIs for the EU, expected to show that both, the manufacturing and the services sectors, remain in the growth path.

The upward strength continued fading in the short term, as in the 4 hours chart, the price is now stuck around a still bullish 20 SMA, whilst technical indicators have turned lower, with the Momentum already below the 100 level and the RSI around 54, while selling interest around 1.0820 remains strong. Still, the price needs to accelerate below 1.0765 to begin a downward corrective move, while only below 1.0700 bears will retake the lead. At this point, the pair needs to surpass 1.0828, February monthly high, to confirm a bullish extension towards 1.0870, December high.

Support levels: 1.0765 1.0730 1.0700

Resistance levels: 1.0830 1.0870 1.0910

20170324EURUSDH4.png

USD/JPY

The USD/JPY pair advanced up to 111.57 at the beginning of the day, as Wall Street closed mixed, but fell afterwards to a fresh 2017 low of 110.62, to settle at 111.00.  Asian share markets closed with modest gains, while European ones saw a dull session, hovering around their opening levels and settling not far away from them. US equities edged modestly higher, but that was not enough to help the pair bounce. An early recovery met strong selling interest on an approach to the 111.60 resistance from where the pair resumed its decline, indicating that speculators are now preferring to sell the rallies. Japan will releases its leading index and the March preliminary manufacturing PMI, expected at 53.5 from previous 53.3. In the 4 hours chart, technical indicators remain within oversold territory, with the RSI indicator heading modestly lower at 27, while the 100 and 200 SMAs slowly turning south far above the current level. Renewed selling pressure below 110.70 should open doors for a continued decline towards 109.90, the 50% retracement of the November/December rally.

Support levels: 110.70 110.30 109.90

Resistance levels: 111.15 111.60 112.00

20170324USDJPYH4.png

GBP/USD

The GBP/USD pair managed to advance up to 1.2530, ending the day a few pips below the level as  the Pound found support on strong February Retail Sales data. Sales rose by 1.4% in the month, while compared to a year earlier, sales jumped 3.7%, well above the 2.6% or the previous revised 1.0%. Excluding fuel, sales rose 1.3% MoM, following two months of decline, taking the year-on-year rate to 4.1%. The CBI survey released later in the day, showed that sales volumes grew at a steady pace in the year to March, and slightly faster than expected, with 44% of retailers saying that sales volumes were up on a year ago, whilst 35% said they were down, giving a balance of +9%, above the 5% expected but matching previous month's reading. The pair maintains its positive tone, although the intraday advance stalled a few pips below a major resistance, the 23.6% retracement of the January's rally at 1.2540, now the level to surpass to confirm additional gains. In the 4 hours chart the price is well above a bullish 20 SMA, but technical indicators are retreating from overbought levels, reaffirming the case for the need of a bullish breakout of the mentioned Fibonacci resistance before considering going long.

Support levels:  1.2500 1.2460 1.2425

Resistance levels: 1.2540 1.2585 1.2620

20170324GBPUSDH4.png

GOLD

Gold prices' advance extended for a sixth consecutive day, as investors continued trading against the greenback. Spot reached a daily high of $1,253.20 a troy ounce, its highest February 28th before pulling back to end the day flat at 1,242.70. The retracement came as a consequence of sharp declines in many other metals, and as the Dollar Index posted a modest recovery, alongside with US Treasury yields. Investors are now waiting for the US Congress decision over the healthcare bill to decide whether to keep buying the commodity or not. In the meantime, the daily chart shows that the price was unable to settle above the 200 DMA, but continues pressuring it for a third consecutive day. The Momentum indicator in the mentioned chart continues heading north well above the 100 level, whilst the RSI indicator turned flat around 62, indicating fading buying interest, although not enough to confirm a bearish correction from current levels. In the 4 hours chart, the price holds above a strongly bullish 20 SMA, whilst technical indicators are retreating from overbought levels, still well above their mid-lines. A downward corrective move can extend down to  1,230.00 without affecting the bullish trend, but a break below this last will turn the risk towards the downside.

Support levels: 1,242.80 1,236.80 1,230.10

Resistance levels: 1,251.30 1,263.80 1,272.80

20170324XAUUSDH4.png

WTI CRUDE 

Crude oil prices resumed their declines this Thursday, with West Texas Intermediate futures down to $47.66 a barrel, as the focus remained on the persistent global glut. Hopes that the OPEC would deal with an oversupply market, boosted prices last November, but after three months into the output cut, the commodity has gave back most of the gains achieved after the announcement, amid increasing US production, which led American stockpiles to record highs. The daily chart for WTI shows that the 20 DMA extended its slide far above the current level, having crossed below the 100 DMA and pointing to cross below the 200 DMA, this last at 49.30, whilst technical indicators are neutral-to-bearish within oversold readings, all of which supports further slides. In the 4 hours chart, a bearish 20 SMA rejected an early advance, whilst technical indicators have extended their declines within negative territory, in line with the longer term perspective.

Support levels: 47.00 46.40 45.80

Resistance levels: 48.10 48.70 49.30

20170324CRUDE_K17H4.png

DJIA

After spending most of the day above their opening levels, US indexes turned lower ahead of the close, with all of the three major indexes closing marginally lower.  Stocks fell in the last minutes of trading on news indicating that the vote of the Obamacare repeal bill was delayed, as the GOP struggles for support. The Dow Jones Industrial Average shed 4 points and settled at 20,656.58. The Nasdaq Composite closed at 5,817.69, down by 4 points, whilst the S&P lost 0.11% to end at 2,345.96. Within the DJIA, Nike was the best performer, up 2.63%, followed by El du Pont that added 1.62%. UnitedHealth Group led decliners, shedding 1.19%, followed by Travelers Cos that closed 0.74% lower. Daily basis, the Dow technical picture is bearish, as the index remained well below its 20 DMA, whilst technical indicators held within negative territory, with the RSI now turning south around 41, anticipating some further slides for this Friday. In the 4 hours chart, the 20 SMA maintains a sharp bearish slope and is about to cross below the 200 SMA above the current level, whilst the Momentum indicator has managed to correct some within negative territory, but the RSI indicator holds around 36, also maintaining the risk towards the downside. 

Support levels: 20,610 20,578 20,526

Resistance levels: 20,707 20,742 20,783

20170324DOW30H4.png

FTSE 100

The FTSE 100 managed to recover some ground this Thursday, as European shares surged, following the positive lead from Asia. The Footsie closed the day 15 points or 0.22% higher at 7,340.71. Next shares led the advance, closing the day up 8.08%, despite reporting their first fall in annual profits in eight years. The news was no surprise, as the retailed warned on profits last January. Marks & Spencer followed, adding 3.82%. Mining-related equities were the worst performers, as base metals came under pressure, alongside with pharmaceuticals, ahead of the US Obamacare repeal bill vote. Randgold Resources was the worst performer, down 2.74%, followed by Glencore, down 2.40%, and Hikma Pharmaceuticals that shed 2.22%. The daily chart for the London benchmark shows that it held below its 20 DMA, with an advance up to it, at 7,346 being quickly reverted, and technical indicators holding within bearish territory, with limited downward scope. In the 4 hours chart, attempts to advance were contained by a horizontal 100 SMA, whilst the 20 SMA turned lower far above it, and technical indicators turned back south within bearish territory, all of which favors additional declines on a break below 7,301, the weekly low.

Support levels: 7,301 7,262 7,239

Resistance levels: 7,346 7,384 7,429

20170324FT100H4.png

DAX

The German DAX settled at 12,039.68, up 137 points or 1.14%, with all European equity benchmarks closing in the green. Financials led the advance as lenders borrowed more than expected under the ECB's TLTRO program, up to 233.5 billion euros for four-year loans, in anticipation of a continued rise in lending. Within the DAX, Deutsche Lufthansa was the best performer, rising 3.23%, followed by RWE AG that added 2.40%. Volkswagen was the worst performer, shedding 0.91%, while Infineon Technologies shed 0.29%, as well as Deutsche Bank. The index eased in after-hours trading, barely holding above the 12,000 level, and with the daily chart showing that the bearish tone seen earlier this week has eased, given that the index settled above a horizontal 20 SMA, whilst technical indicators turned higher, now entering positive territory. In the 4 hours chart, however, the upward potential seems limited, as the benchmark is unable to clearly break above a bearish 20 SMA, whilst the Momentum indicator turned lower after failing to overcome its mid-line, and the RSI indicator also retreated around its mid-line.

Support levels: 11,957 11,895 11,851

Resistance levels: 12,045 12,091 12,139

20170324DAX30H4.png

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