EUR/USD should hold initial test at 1.0569 Commerzbank
Axel Rudolph, Senior Technical Analyst at Commerzbank, expects sellers to find initial support in the 1.0570 area. “EUR/USD continues to hold around the 1 1/2-, 17- and 32- year uptrend lines at 1.0682/14”. “The current November low at 1.0569 will need to be slipped through on a closing basis to confirm the move lower. However the move to a new low last week has been accompanied by a TD perfected set up on the daily chart and there are 13 counts on the intraday charts and we would allow this to hold the initial test. Below the current November low at 1.0569 lie the 1.0523 December 2015 low and the 1.0457 March 2015 low”. “Initial resistance is seen at the 1.0821 March low and the 1.0851 October low. Expect to see a recovery bounce over the next few days”.
GBP/USD testing lows near 1.2400, UK Autumn Forecast in focus
The GBP/USD pair stalled its minor-recovery ahead of hourly 100-SMA near 1.2420 region, and dropped back to test 1.24 handle amid a cautious tone prevalent in the markets.The major extends its bearish consolidation phase into early European trading as bulls remain at bay, in response to recent broad based US dollar strength, with markets pricing-in a Dec Fed rate hike.While the pound also remains under pressure on the back of resurgence of Brexit-process related concerns as well as in anticipation of the highly influential UK Treasury’s Autumn Forecast Statement, which is expected to unveil a bleak economic outlook for the British economy. The spot is last seen exchanging hands at 1.2407, meandering near daily low struck at 1.2403 last hour, down -0.14% so far.Besides, the Autumn Forecast statement, markets will also look forward to the speech from BOE MPC member Forbes, US economic releases and FOMC minutes due on the cards later today. At 1.2420, the pair finds immediate resistances placed at 1.2434/37 (50 & 10-DMA), 1.2499 (daily R1) and 1.2514 (Nov 21 & 22 high). While supports are lined up at 1.2381 (Nov 22 low) and 1.2366 (daily S1) and below that at 1.2308 (Nov 21 low).
EUR/JPY consolidating around 118.00 handle ahead of EU
The EUR/JPY cross struggled to build on Tuesday's up-move beyond 118.00 handle, to a four-month high, and witnessed a mild retracement ahead of Euro-zone PMI prints.Currently hovering around 118.00 mark, the cross on Wednesday has failed to extract benefit from the bid tone surrounding the EUR/USD major and is being weighed down by prevalent cautious sentiment in equity markets. In fact, indices futures are pointing to weaker opening for European equity markets, which is supportive of the Japanese Yen's safe-haven demand and restricting further up-move for the cross.Next in focus would be the flash version of composite Euro-zone PMI prints (services and manufacturing), proceeded by PMI releases from the region's two largest economies - Germany and France. Apart from Euro-zone PMI numbers, broader market risk-sentiment would continue to derive demand for safe-haven assets (JPY) and eventually provide impetus for the EUR/JPY cross. Immediate downside support is pegged at 117.80-75 region, which if broken seems to accelerate the slide immediately towards 117.40 horizontal support en-route its next important support near 117.00 handle. Meanwhile, momentum above 118.15 (yesterday's high) seems to pave way for a sharp up-move towards the very important 200-day SMA resistance near 118.60-65 region, which if cleared has the potential to continue boosting the cross further towards 120.00 psychological mark in the near-term.
GBP/AUD should slip back to 1.6250 - Westpac
Sean Callow, Research Analyst at Westpac, notes that the Sterling has been the strongest G10 currency over the past month by a considerable margin, even rising against the resurgent US dollar. “A degree of encouragement in UK economic data and the Bank of England’s switch from an easing bias to neutral have fuelled partial covering of very large short GBP positions.” “But we suspect this period of sterling outperformance is coming to an end. In the next few weeks, European politics will start to draw increased market attention after the recent fixation with the US elections. In Dec, the UK government will appeal the ruling that Brexit needs to be voted on in Parliament. The renewed debate is unlikely to support UK confidence.”“AUD has been close to the weakest G10 currency since the US election, with long positions squeezed by the surge in US yields and attendant rout of Asian FX.” “But with key commodity prices holding higher for longer, the RBA firmly on hold into 2017 and the rise in US yields arguably excessive, AUD/USD should become more stable in the weeks ahead. This should see GBP/AUD slip back to 1.6250.”
USD/CHF sees aggressive selling, around 1.0100
The US dollar came under aggressive selling pressure in early Europe, knocking-off USD/CHF below 1.01 handle, before recovering some ground to now trade around the last. Currently, the USD/CHF pair edges -0.13% lower at 1.0100, trading within a striking distance of daily lows struck at 1.0093 in the last hour. The major breaks the Asian consolidation box to the downside, as the bears regain control amid extension of the corrective mode in the US dollar against its major peers. Meanwhile, the US dollar index drops -0.10% to test lows struck just below 101.00.The major remains offered also on the back of prevalent cautious tone in the markets, as traders refrain from creating fresh positions in the greenback ahead of the FOMC minutes, which will be released in the American afternoon. To the upside, the next resistance is located at 1.0136 (multi-month high) and above which it could extend gains to 1.0150 (psychological levels) and 1.0200 (zero figure) next. To the downside, immediate support might be located at 1.0050 (10-DMA) and below that 1.0000 (parity) and from there to 0.9914 (20-DMA).
USD/CAD sidelined around 1.3430, FOMC eyed
The greenback is trading in a very tight range on Wednesday, taking USD/CAD to the 1.3440/30 band ahead of the opening bell in Euroland.The pair is now looking to stabilize in the middle of the weekly range around 1.3430, coming up after yesterday’s brief test of lows near 1.3370.While the buck remains sidelined around 101.00 the figure when tracked by the US Dollar Index, the softer tone in crude oil prices seems to be limiting the downside somewhat.Prices for the West Texas Intermediate has abandoned the area of recent tops above the $49.00 mark, slipping back to sub-$48.00 levels following a larger-than-expected build in Gasoline inventories, as reported by the API late on Tuesday. In the same report, US crude oil supplies unexpectedly decreased by nearly 1.3 million barrels.Later in the day, US advanced manufacturing PMI gauged by Markit is due followed by Durable Goods Orders, New Home Sales, Initial Claims, the final Reuters/Michigan index for November and the FOMC minutes. As of writing the pair is retreating 0.11% at 1.3426 and a break below 1.3374 (low Nov.22) would open the door to 1.3311 (38.2% Fibo of the 2016 drop) and finally 1.3260 (low Nov.9). On the flip side, the immediate hurdle lines up at 1.3566 (high Nov.18) followed by 1.3575 (50% Fibo of the 2016 drop) and finally 1.3590 (high Nov.14).
USD/JPY confined in a narrow range around 111.00 handle
In a relatively quiet Asian trading session on Wednesday, the USD/JPY pair traded with mild negative bias was confined in a narrow trading range just below 111.00 handle.The pair seems to have entered near-term consolidation phase after its recent sharp up-surge of over 1000-pips, following Donald Trump's surprise victory in the US presidential election. Thin liquidity, on the back of a National holiday in Japan, has failed to provide any impetus, while prevalent cautious sentiment around Asian equity market is extending some support to the Japanese Yen's safe-haven appeal and restricting the pair just below the multi-month tops. Moreover, investors seems reluctant to build fresh bullish USD bets ahead of today's FOMC minutes from November 1-2 meeting, which would be looked upon for further clarity on the Fed's near-term monetary policy outlook and would be key factor determining the next leg of directional move for the pair. On the economic data front - monthly durable goods orders, weekly jobless claims and new home sales data, might provide some impetus for the pair during NA session. Weakness below 5-day SMA support near 110.80 region is likely to get extended towards 110.45 (Monday's low) ahead of 110.27 (yesterday's low) below which the pair is likely to witness a corrective slide towards 109.75 horizontal support. On the upside, sustained move above 111.15 immediate resistance might continue to confront resistance near 111.35 area and is closely followed by resistance near 111.45 level (May highs).
Oil trades subdued ahead of EIA inventory report
Oil prices on both sides of the Atlantic halted its recovery and fell back into losses, as markets remain wary over an OPEC cut deal, while also weigh the latest bearish private sector crude stockpiles. Currently, both crude benchmarks trade range-bound to lower, with Brent down -0.26% to trade around $ 49 mark while WTI loses -0.23% to 47.92 levels. Oil prices are seen consolidating yesterday’s losses, as uncertainty increases over a potential OPEC output agreement likely to be reached on Nov 30.While API crude inventory report showed that the US crude reserves fell by 1.3 million barrels for the week ended Nov. 18, however, a bigger-than expected build in the gasoline stockpiles, is what actually continues to weigh down on the black gold. Focus now shifts towards the official government figures on the crude inventory change from EIA due later on Wednesday for fresh direction. While OPEC output deal-related news flow will be closely monitored for further incentives.
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