EUR/USD bearish, still targeting 1.0640 UOB
Strategists at UOB Group remain bearish on EUR/USD, which could visit the 1.0640 area in the next weeks. “EUR rebounded to a high of 1.0816 but the recovery was short-lived. The rapid pull-back from the high coupled with the weak daily closing has resulted in a weak undertone. A move below the 1.0705/10 low seen Monday would not be surprising but based on the current momentum, the next major support at 1.0640 is likely out of reach for now”.“The immediate resistance at 1.0775 is likely strong enough to cap any intraday rebound but the stronger level is at the 1.0816 high seen yesterday”. “There is no change to the bearish view for EUR as we continue to anticipate a move lower towards the next major level at 1.0640”.
GBP/USD flirting with highs below 1.2500 ahead of data
The Sterling is trading on a firm fashion vs. the greenback on Wednesday, now helping GBP/USD to test the upper bound of the range in the 1.2485/90 band.The pair is advancing for the first time after two consecutive pullbacks, extending its consolidative theme below last week’s tops near 1.2680 ahead of key labour market figures in the UK due later.The renewed offered bias in the buck is collaborating with the broad-based recovery in the risk-associated space today, after the US Dollar Index clinched fresh yearly tops on Tuesday.Spot remains under pressure nonetheless, as expectations of a rate hike by the Federal Reserve should continue to support the case for a stronger greenback, while uncertainty around ‘soft/hard Brexit’ along with the triggering of Article 50 would keep the pressure on the domestic front.From the positioning perspective, speculative GBP longs have dropped to 3-week lows while net shorts climbed to the highest level in the last three weeks during the week ended on November 8 and as shown by the latest CFTC report.As of writing the pair is gaining 0.22% at 1.2483 facing the next hurdle at 1.2675 (high Nov.11) followed by 1.2683 (55-day sma) and then 1.2796 (low Jul.6). On the flip side, a breach of 1.2378 (low Nov.15) would aim for 1.22352 (20-day sma) and finally 1.2349 (low Nov.9).
AUD/USD drops to fresh session low
The AUD/USD pair failed to build on to Tuesday recovery momentum from the very important 200-day SMA and resumed with its near-term slide to currently trade at a fresh session low level around 0.7535 region.Broad based greenback strength, led by increasing market expectations of an eventual Fed rate-hike action, has been a key theme since the outcome of US presidential election. Moreover, Tuesday's upbeat US economic data further reinforced market expectations and is exerting selling pressure around higher-yielding currencies - like Aussie. Adding to this, the ongoing weakness in the commodity prices, especially Copper, is also denting demand for commodity-linked currencies and contributing to the pair's slide on Wednesday. Looking ahead, today's release of industrial production and capacity utilization rate from the US would be looked upon for short-term trading opportunities ahead of Australian jobs report during Asian session on Thursday. From Technical perspective, the pair's rebound from 200-day SMA on Tuesday lacked follow through momentum and is clearly indicative of consolidative phase before the pair resumes its near-term downslide. Weakness below 0.7535 is likely to get extended towards 200-day SMA support near 0.7510-05 region, which if broken decisively would pave way for continuation of the pair's near-term corrective slide initially towards 0.7485 support and eventually towards 0.7450-40 strong horizontal support.On the upside, 0.7550-55 area now becomes immediate resistance. Recovery above this immediate hurlde, leading to a subsequent momentum though 0.7565-70 resistance, has the potential to lift the pair towards 100-day SMA strong resistance near 0.7595-0.7600 region.
USD/JPY consolidating recent gains to multi-month high
After an initial downtick to session through level near 108.80 region, the USD/JPY pair managed to recover its lost ground and has now moved back above 109.00 handle.Currently trading 109.15-20 band, nearly unchanged from yesterday's closing level, the pair has now moved within striking distance of Tuesday's multi-month high level near 109.35 region. Improving investor risk appetite, as depicted by a rise in Tokyo's Nikkei 225 to its highest level since February, is further denting the Japanese Yen's safe-haven appeal and providing an additional boost to the major. Later during NA session, second-tier US manufacturing data - Industrial Production and Capacity Utilization Rate, would be looked upon for short-term trading opportunities.Meanwhile, the broader trend would remain dependent on market expectations of an eventual Fed rate-hike action, which currently is pricing-in over 90% 90% chances of a rate-hike at the next FOMC monetary policy meeting on December 13-14.From technical perspective, the pair has already moved into near-term overbought conditions and hence, warrants a near-term consolidation or a corrective move before the next leg of appreciating move.Momentum above 109.34 (yesterday's high) is likely to get extended towards 109.59 (June 2 high) before the pair darts towards 110.00 psychological mark. On the downside, sustained weakness below 108.80 (session low) might trigger a corrective slide towards 108.00 handle with 108.50 area acting as intermediate support.
EUR/GBP flirting with 0.8600 handle ahead of UK jobs data
The EUR/GBP cross was seen struggling for a firm direction and has been confined within a narrow trading range ahead of UK jobs data.Currently trading around 0.8600 region, the cross on Tuesday faced rejection from just above 0.8700 handle and reversed majority of disappointing UK CPI-led gains. On Wednesday, broad based greenback retracement assisted both the EUR/USD and the GBP/USD majors to stage a recovery and has failed to provide any impetus for the EUR/GBP cross.Market participants also await for the release of monthly employment details from UK before initiating any fresh trading positions. Consensus estimates point that the number of people claiming unemployment-related benefits increased by 2.3K in October, while Average Earnings for the three months to September is expected to have grown by 2.3% as compared to the same period a year earlier. Disappointing jobs report, coupled with the unexpected drop in CPI, might fuel speculation of further easing by BoE, which would attract fresh selling pressure around the British Pound and eventually assist the EUR/GBP cross to stage some meaningful recovery from nearly eight-week lows.From current levels, 0.8580 level is likely to provide immediate support below which the ongoing corrective slide seems to get extended towards 0.8500 psychological mark with 0.8550 level acting as intermediate support. Meanwhile, on a sustained recovery back above 0.8625-30 (session peak) the cross is likely to make a fresh attempt toward reclaiming 0.8700 handle, which if cleared has the potential to lift it towards 50-day SMA resistance near 0.8755-60 region.
USD/CAD bounces off 1.3450, EIA, data eyed
The Canadian dollar is alternating gains with losses vs. its American neighbor on Wednesday, taking USD/CAD to the area of 4-day lows near 1.3450.The pair is struggling to gather upside traction today as the buying interest around CAD has intensified as of late following the strong rebound in crude oil prices.In fact, the barrel of West Texas Intermediate has gained nearly 9% since last week’s lows near $42.20 on rising hopes of a deal to limit crude oil output at the OPEC meeting in Vienna on November 30.Collaborating with the downside, the US Dollar Index has receded from yesterday’s tops in the boundaries of 100.30, levels last seen in December 2015.Data wise in the US docket, Industrial/Manufacturing Production is due followed by the NAHB index, Capacity Utilization and the weekly report on crude inventories by the DoE. In addition, Philly Fed P.Harker (2017 voter, hawkish) is also due to speak.In Canada, Manufacturing Shipments is only due along with the speech by BoC Deputy Governor T.Lane. As of writing the pair is up 0.04% at 1.3453 and a break above 1.3575 (50% Fibo of the 2016 drop) would expose 1.3590 (high Nov.14) and finally 1.3839 (61.8% Fibo of the 2016 drop). On the other hand, the immediate support lines up at 1.3395 (20-day sma) followed by 1.3311 (38.2% Fibo of the 2016 drop) and then 1.3260 (low Nov.9).
USD/CHF hits fresh multi-month high amid renewed USD strength
The USD/CHF pair reversed its early slide to session low of 0.9983 and is now attempting to build on to its momentum above parity mark. Currently trading at a fresh multi-month high, around 1.0020 region, the pair caught fresh bids at lower level and turned higher for the seventh straight session amid renewed prevalent risk-on mood, which seems to be denting the Swiss Franc's safe-haven appeal. The pair's recovery got an additional boost after comments from FOMC member James Bullard pointed towards a possible Fed rate-hike action in December. In absence of any major market moving releases, the current bounce from session low reaffirms the pair's well-established near-term up-trend amid increasing prospects of an eventual Fed rate-hike decision. Looking ahead, today's second-tier US economic releases, featuring Industrial Production and Capacity Utilization Rate, might provide some short-term trading opportunities. From current levels, 1.0030 area is likely to act as immediate resistance above which the pair is likely to dart towards March highs resistance near 1.0085-90 region. On the downside, weakness back below 1.00 psychological mark, leading to a subsequent drop below session low support near 0.9980 region, is likely to trigger a corrective slide towards 0.9945 intermediate support before the pair eventually drops to 0.9915-10 horizontal support.
Gold drops back to $ 1225 as T-yields recover
Gold brought an end to its brief phase of consolidation in Europe, and broke to the downside amid a recovery in the US treasury yields across the curve. Currently, Comex gold futures trade 0.12% higher at 1225.75, having faced strong offers above $ 1230 levels. The yellow metal came under fresh selling pressure ahead of European open, as risk-on remains in full swings and underpins the demand higher-yielding treasury yields, in wake of a Trump win, at the expense of zero-yielding asset, gold.The US dollar also stalled its corrective slide and recovers in tandem with the treasury yields, which also collaborated to the renewed weakness behind the yellow metal.Markets will continue to track the broader market sentiment and trends around the T-yields ahead of the US macro news due later in the NA session. The metal has an immediate resistance at 1232.95 (daily high) and 1238.30 (daily R2). Meanwhile, the support stands at 1220 (zero figure) below which doors could open for 1211 (five-month lows).
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