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EURUSD
The EUR/USD pair fell on Friday as the dollar got to correct extreme oversold conditions after falling to fresh multi-month lows against most of its major rivals. The pair trimmed losses ahead of the close and finished the week around 1.2250. A sour market’s mood helped the greenback amid the lack of progress in Brexit negotiations and US stimulus talks. Nevertheless, discussions on both extended into the weekend, keeping the high-yielding EUR near the year’s high.
Over the weekend, US lawmakers announced they reached a compromise, paving the way for a $900 billion coronavirus relief package and government funding. A sticky point is a dispute over Fed’s lending facilities, as Republicans are against letting the central bank interfere in business.
The macroeconomic calendar was quite scarce, as, on Friday, Germany published December IFO Business Climate, which came in better than anticipated, improving from 90.9 to 92.1. On Monday, the EU will release the preliminary estimate of December Consumer Confidence, foreseen at -17.6. The US will release the November Chicago Fed National Activity Index.
The EUR/USD pair is overbought in the daily chart, with the risk still skewed to the upside, as it continues to develop above firmly bullish moving averages. The Momentum indicator maintains its bullish slope while the RSI consolidates around 72. In the nearest term, the 4-hour chart indicates that bulls retain control, as a bullish 20 SMA keeps providing intraday support, with buyers jumping in on approaches to it. Technical indicators resumed their advances after correcting within positive levels.
Support levels: 1.2220 1.2170 1.2120
Resistance levels: 1.2280 1.2330 1.2385
USDJPY
The USD/JPY pair fell sharply last week, finishing it around 103.30, not far from a daily low of 102.86. The broad dollar’s weakness alongside mounting concerns related to Brexit negotiations and a US stimulus package were behind the pair’s slump. Wall Street closed in the red, while US Treasury yields were flat on Friday, also supporting the USD/JPY bearish case. US indexes, however, bounced sharply in after-hours trading, poised to start the week with gains.
On Friday, Japan published November national inflation, which contracted further, to -0.9% YoY. The Bank of Japan had a monetary policy meeting, and as widely anticipated, the current policy was left unchanged. Governor Haruhiko Kuroda said that policymakers wouldn’t review the monetary policy objectives but added that policymakers would examine more effective ways to achieve the 2% inflation target. The Japanese macroeconomic calendar will be empty this Monday.
The USD/JPY pair is bearish, according to the daily chart, as it has accelerated its decline below a bearish 20 SMA, which remains below the longer ones. Technical indicators remain near weekly lows, although with limited bearish strength. In the 4-hour chart, the risk is also skewed to the downside, as the pair failed to settle above a bearish 20 SMA, setting below it. Technical indicators retreated after nearing their midlines, holding within negative levels without directional strength.
Support levels: 103.15 102.70 102.20
Resistance levels: 103.50 103.90 104.30
GBPUSD
The GBP/USD pair fell to 1.3407 on Friday, retreating further from the year’s peak at 1.3624. The pair recovered roughly 100 pips ahead of the daily close, ending the week with substantial gains. The pound’s behavior is dictated by Brexit-related headlines, as negotiations continue with a few days to go to the final deadline. Market players are hoping a decision will be made this week ahead of Christmas, although weekend news seem discouraging as trade talks are still stuck. Differences remain not only around fisheries but also on the level playing field.
On Saturday, UK Prime Minister Boris Johnson moved London and areas of Southeast England into tier-four level of restrictions, amid a new variant of the coronavirus, which seems to be much more contagious. Johnson said that there’s no reason to believe the vaccine will be any less effective against it. Still, discouraging news may push sterling lower at the weekly opening. The UK won’t publish macroeconomic data this Monday.
The GBP/USD pair is losing bullish potential but remains far from bearish, according to the daily chart. In the mentioned time-frame, technical indicators have turned modestly lower but hold near weekly highs. The 20 SMA keeps advancing below the current level and above the longer ones, reflecting buyers’ conviction. In the 4-hour chart, the pair is seesawing around a bullish 20 SMA, while technical indicators corrected extreme overbought conditions to pare their slumps within neutral levels.
Support levels: 1.3485 1.3430 1.3370
Resistance levels: 1.3540 1.3590 1.3640
AUDUSD
The AUD/USD pair held on to most of its weekly gains and closed at 0.7620, not far from its year’s high at 0.7639. On Friday, the aussie fell to 0.7582, as the greenback found some temporal demand during Asian trading hours. The pair recovered as investors resumed selling the American currency ahead of the weekly close. Australia didn’t publish relevant macroeconomic data on Friday but continued to find support in upbeat employment figures released earlier in the week.
The AUD/USD pair is technically bullish, according to the daily chart, despite overbought. The Momentum indicator heads firmly higher as the RSI indicator hovers around 78. Moving averages head higher below the current level, with the 20 SMA providing dynamic support at around 0.7450. In the 4-hour chart, the pair bounced from a bullish 20 SMA while technical indicators resumed their advances after correcting overbought conditions, in line with further gains ahead.
Support levels: 0.7610 0.7565 0.7620
Resistance levels: 0.7640 0.7675 0.7710
SILVER
Silver also faced a technical correction downside on Friday as the USD index DXY managed to get away from its 2.5 years lows in the aftermath of ultra-dovish Fed. Gold to Silver ratio tested 73.00 levels as Silver slid below $26.00 while Gold failed to test $1,900. On the other hand, while Gold profited 22.20% this year so far, Silver managed to print 43.30% indicating the better performance. Apart from the typical USD dynamics, Silver might face extra support from the normalisation in the markets during the post-pandemic period.
Below the $22.90 level ($11.63-$29.86 38.20%), the supports can be followed at $20.75 ($11.63-$29.86 50.00%) and $18.42 ($11.63-$29.86 61.80%). Over the $22.90 level, the targets up can be followed at $25.21 ($11.63-$29.86 23.60%), $26.00 (August-September support), $27.00 and $28.00 levels.
Support Levels: $22.90 $20.75 $18.42
Resistance Levels: $25.21 $26.00 $27.00
DODDOO
As the markets are heading into the Christmas holiday, Dow Jones faced a technical correction but managed to stay over the 30,000 level. While a deal has not been finalised between yet, US Senate Majority Leader Mitch McConnell was positive on the state of discussions, saying that talks on relief are making significant progress and he is more optimistic now than he was last night. Meanwhile, Democrat officials are talking about the prospect that the House of Representatives could vote on a deal as soon as tomorrow and Speaker of the House (and leader of the Democrat Majority there) Nancy Pelosi has just postponed her weekly news conference for a second time on Friday which means that she is likely still in talks. On the other hand, after the Pfizer&BioNTech vaccine, FDA granted emergency permission to the Moderna vaccine too.
Markets will have a short week ahead due to the Christmas holiday. The interest rate decision will be followed from China early today while Gross Domestic Product Annualized (Q3) in the US will be followed on Tuesday. Apart from the consumption expenditures data set on Wednesday, the weekly labour data set will be followed instead of Thursday due to the holiday. On Thursday, Durable Goods Orders (Nov) and Nondefense Capital Goods Orders ex Aircraft (Nov) in the US will be followed by the markets. On Friday the markets will be closed due to Christmas holiday while the other week will be in holiday mood until the first week of 2021.
From the technical point of view, if the index stays over 29,000, 29,500 and 30,000 levels can be followed as new targets high while below the 28,400 level, 28,000 and 27,770 can be followed as supports.
Support Levels: 28,400 28,000 27,770
Resistance Levels: 29,500 30,000 30,500
GOLD
After the strong rally, Gold faced a correction on Friday while the USD index DXY managed to get away from its lows. DXY tested its lowest level since April 2018 with the help of dovish FOMC as Powell announced Fed’s all support with an open-end timeframe. On the other hand, stimulus expectations are also weighing on the USD. As the markets are heading into the Christmas holiday, Gold is stuck between the vaccine developments and USD dynamics at the moment. While the vaccine news is creating optimism which will have its effects in real life in a longer time-frame, stimulus and extreme liquidity will hit the markets way faster in the short term. Therefore, precious metals will most likely find more support in the coming term. Also, it is expected that the Biden presidency and stimulus programs might create inflation in the US. As precious metals are a good hedge against inflation, Gold might find extra support.
The week will kick off with the PBoC interest rate decision early on Monday, Gross Domestic Product Annualized (Q3) in the US will be followed on Tuesday. On Wednesday, weekly labour data sets with consumption expenditures will be followed. On Thursday, Durable Goods Orders (Nov) and Nondefense Capital Goods Orders ex Aircraft (Nov) in the US will be followed by the markets. On Friday the markets will be closed due to Christmas holiday while the other week will be in holiday mood until the first week of 2021.
Gold tested its highest level since mid-November while the US 10-year continues its uptrend at 0.94%. From the technical point of view, below the $1,860 level, the supports can be followed at $1,800, $1,763 ($1,451-$2,075 61.80%) and $1,700 levels. Over the $1,860 level, the resistances can be followed at $1,900 with $1,956 ($1,451-$2,075 38.20%) and $2,000 levels.
Support Levels: $1,800 $1,763 $1,700
Resistance Levels: $1,900 $1,956 $2,000
OILLLW
WTI kept its march north driven by the vaccine and stimulus optimism. While the Pfizer&BioNTech vaccine has already got approval, during Friday’s Asia session, the US FDA informed Moderna that it will rapidly work towards issuance of Emergency Use Authorization (EUA) for its Covid-19 vaccine. The FDA is expected to grant the EUA as early as Friday, and this comes after an advisory panel on Thursday recommending the FDA issue EUA. On the other hand, positive news keeps coming from Congress on the stimulus deal to support spending which will increase the demand for energy.
WTI tried to test $50.00 levels but stayed below the important physiological level. As the black gold now hit overbought levels last seen in late February. Next supports can be seen at $48.50, $48.00 and $47.00 respectively while the resistances can be followed at $49.00, $50.00 and $51.00 levels.
Support Levels: $48.50 $48.00 $47.00
Resistance Levels: $49.00 $50.00 $51.00
MACROECONOMIC EVENTS
* All the Moving Average support and resistance levels are dynamic by nature. Means when the price approaches the Moving averages, slight variation occurs in the forecasted Moving Average support and resistance levels. Previous few days’ intraday levels are also signicant while trading the current day as the price tend to hover around these levels for some time. Levels in red indicate strong, critical or vital.
Please remember that trading financial markets carry a high degree of risk to your capital. It is possible to lose more than your initial stake. Leveraged products may not be suitable for all
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