EUR/USD retreats from 1.0800, dollar under pressure
EUR/USD met some selling pressure in the 1.0800 neighbourhood on Monday, now retreating to the 1.0775/80 band following the European open.Spot has come down from fresh 3-week tops near the 1.0800 handle seen on Monday after markets quickly shrugged off another political risk event following the ‘No’ win at the Italian referendum.Although Italian PM M.Renzi will stay in office for the time being, rumours of snap elections to be possibly held in February are already surrounding the political skies in Italy, with candidates like Delrio, Padoan and Grasso sounding as firm alternatives to succeed Renzi. All in all, the effervescence around the recent event seems somewhat alleviated now, although the uncertainty in the political arena is poised to grow bigger in the upcoming weeks.Data wise in Euroland, Q3 GDP figures are due later while German Factory Orders have expanded at a seasonally adjusted 4.9% on a monthly basis in October. Across the pond, October’s Trade Balance figures and Factory Orders are due later in the NA session.On the positioning front, speculative longs have climbed to the highest level since later October 2013, while net shorts are at 3-week tops.The pair is now up 0.11% at 1.0775 and a break above 1.0798 (high Dec.5) would target 1.0815 (38.2% of the November drop) en route to 1.0848 (low Oct.25). On the flip side, the immediate support aligns at 1.0503 (2016 low Dec.5) followed by 1.0457 (2015 low Mar.16) and then 1.0332 (monthly low January 2003).
GBP/USD: Bulls gather pace, prints fresh 2-month highs
After a brief phase of consolidation in the late-Asian session, the GBP/USD pair finally regained momentum and broke higher, now receding slightly from fresh two-month highs at 1.2763, still up +0.19% so far.The cable remains strongly bid and extends its bullish momentum for the sixth straight session, as the US dollar continues to reverse its broad rally to fresh multi-year tops, in a pullback to Trump-win induced upsurge.While there seems to be no major catalyst behind the latest leg higher except for a retreat in the US treasury yields, which boost the demand for the GPB as an alternative higher-yielding asset.In absence of fresh economic data from the UK calendar, the major will get influenced by the broader market sentiment ahead of the US trade and factory orders due later in the American session. In terms of technical levels, upside barriers are lined up at 1.2765 (2-month top), 1.2779 (daily R1) and 1.2800 (round number). While supports are seen at 1.2694 (5-DMA) and 1.2623 (previous low) and below that at 1.2583 (10-DMA).
USD/JPY confined in a range around 114.00 mark
Following yesterday's volatile session, the USD/JPY pair was confined within a narrow trading band in a directionless price-action on Tuesday. Currently trading marginally 114.00 handle, the pair failed to build on to its early recovery move from session low level of 113.50 to back above 114.00 handle as market digested a spurt in FX market volatility following a 'NO' vote to Italian Prime Minister Matteo Renzi’s constitutional reforms proposal in a referendum on Sunday. Meanwhile, the post US-election US Dollar rally, on growing expectations of aggressive fiscal stimulus by Trump administration in order to support the US economy, also seems to be losing momentum and has failed to provide fresh impetus for the major. Investors now look forward to next week's FOMC meeting and updated economic projections, which would throw light on the Fed's near-term monetary policy outlook and eventually determine the next leg of directional move for the major.Meanwhile, today's US economic calendar, featuring - revised non-farm productivity, trade balance data and factory orders, would be looked upon for short-term trading opportunities during NA session.Immediate resistance on the upside is pegged at 114.45-50 region above which the pair seems all set to head towards testing last week's multi-month high resistance near 114.80 region ahead of 115.00 psychological mark. On the downside, weakness below session low support near 113.50 level now seems to drag the pair back below 113.00 handle, towards testing 112.85 support area (yesterday's low).
GBP/JPY building on momentum above 200-DMA
The GBP/JPY cross extended its near-term bullish trajectory and is now sustaining its strength above the very important 200-day SMA.Currently trading comfortable above 145.00 mark, closer to over 5-month high touched on Monday, an offered tone around the Japanese Yen had been a key drive of the pair's up-move since the beginning of November and also helped it to recover from Monday's early weakness led by Italy's 'NO' vote. Monday's up-move was further supported by strong reading from UK services sector, which added on to last week's upbeat UK Construction PMI print for November and is further contributing to the pair's bid tone for the sixth consecutive session on Tuesday. Even from technical perspective, decisive move above 200-day SMA, for the first time since Nov. 2015, is further pointing to a bullish set-up and thus, increasing possibilities of additional near-term up-move even from current levels. From current levels, momentum above 146.00 handle (yesterday's multi-month high) has the potential to lift the cross beyond 147.00 round figure mark towards its next hurdle near 147.95-148.00 region. On the downside, sustained weakness below 145.00 mark, leading to a subsequent break below session low support near 144.50 level, is likely to accelerate the slide back towards retesting 200-day SMA, resistance turned support, near 143.65-60 region.
USD/CAD bounces-off session low as oil retreats
The USD/CAD pair has managed to bounce-off session lows but remained confined in a narrow trading band, closer to nearly 7-week low touched in the previous trading session. Currently trading in neutral territory, around 1.3270 region, retracing crude oil prices, with WTI crude oil now trading with a weakness of over 1%, is seen weighing on the commodity-linked currency - Loonie and contributing to the pair's recovery from session low. A strong rally in crude oil, in wake of last week's OPEC deal to cut its oil output, provided an additional boost to the Canadian Dollar. The coupled with a corrective slide in the greenback, as measured by the overall US Dollar Index, has led to the pair's corrective slide of over 200-pips in the past three trading session. Later during NA session, Canadian trade balance data accompanied by US economic docket that includes - revised non-farm productivity, trade balance data and factory orders, would be looked upon for short-term trading impetus. Meanwhile, the broader trend would continue to be driven by US price dynamics, on market expectations over the Fed's monetary policy stance, and sentiment surrounding crude oil prices.Immediate downside support is pegged at 1.3250 region (session low) below which the pair is likely to aim towards testing 100-day SMA support near 1.3190 region. On the upside, momentum above session peak resistance near 1.3285 is likely to get extended towards 1.3300 round figure mark ahead of 50-day SMA support break-point, now turned resistance, near 1.3325-30 region.
Oil keeps losses as rising output overshadows OPEC deal
Oil prices on both sides of the Atlantic keep the corrective mode intact from multi-month highs, as sentiment remains sour amid rising production levels from OPEC and Russia.Currently, both crude benchmarks remain in the red, with Brent around $ 54.60 while WTI drops -1% to $ 51.30 levels. Oil prices extend weakness into Europe, after reports hit the wires that the OPEC crude output increased sharply and set another record high, joining Russia in increasing output levels.The reports refueled supply glut concerns in an already oversaturated oil markets, and overshadowed renewed optimism triggered by last week’s OPEC output cut deal.Next of relevance for oil markets remains the US private sector oil inventories data due to be published by API later today, while the official government figures from the EIA will be released tomorrow.A break above $55.00 (zero figure) could yield a re-test of the multi-month highs of $55.33 (multi-month tops). On the lower side, breach of support at $54.36 (Daily low) would expose the psychological support of $53.50.”
USD/CHF erases tepid recovery gains, flat-lined near 1.0050
The USD/CHF pair's attempted recovery move ran through some offers near 1.0080 and the pair has now retraced back to currently trade near yesterday's 12-day closing low. After an initial up-move to 1.0180 region, the pair on Monday reversed sharply and dropped to its lowest level since Nov. 17. In the process, the pair broke below a 100-pips consolidative range, possibly suggesting further corrective slide in the near-term. Investors on Tuesday will focus on the Swiss CPI, due in some time, which if come-in to show even a slight improvement in consumer prices might confirm the break-down and attract fresh selling pressure around the major. Later during the day, US economic docket that includes - revised non-farm productivity, trade balance data and factory orders would be looked upon for further impetus during NA session. However, the broader trend would remain dependent on market expectations of Fed's monetary policy stance, beyond December meeting. A follow through selling pressure below 1.0050 (yesterday's low) is likely to accelerate the slide towards 1.0015 intermediate support before the pair heads towards retesting parity mark. On the upside, 1.0080 level (session peak) now seems to have emerged as immediate resistance above which the pair is likely to aim towards 1.0100 handle before heading towards its next resistance near 1.0140 region.
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