EUR/USD support seen at 1.0710/1.0690 Commerzbank
According to Karen Jones, Head of FICC Technical Analysis at Commerzbank, spot appears initially supported in the 1.0710/1.0690 band.“EUR/USD continues to hold steady yesterday just below the 38.2% retracement at 1.0816. Adding to the weight of resistance here - the March low can be seen at 1.0821 and the October low at 1.0851, our negative bias remains entrenched below here”.“Above 1.0851 would initiate a deeper retracement to 1.0910 then 1.1000”.“Intraday dips should find some support at 1.0710/1.0690 ahead of the November 2015 low at 1.0523, and the recent low at 1.0505, which guards the March 2015 low at 1.0457”.
GBP/USD flirting with daily highs in the mid-1.2600
The selling bias around the buck is helping GBP/USD to advance to he area of session tops in the 1.2650/60 band on Thursday.The pair is managing to post gains after two consecutive pullbacks following the rejection from fresh 2-month peaks near 1.2780 earlier in the week, as fundamentals for a more sustainable upside remains absent for the time being.Poor UK data as of late plus an erratic performance of the greenback has been also supporting the choppy trade around spot in past sessions, although fears among investors of the likeliness of a ‘hard Brexit’ seem somewhat alleviated, underpinning GBP and limiting the downside at the same time.As Senior FX Strategist at Rabobank Jane Foley puts it: “We see risk for GBP/USD dipping back to the 1.24 area on a 3 mth view in recognition of the political uncertainty that still clouds the UK. In the absence of further signs that the UK could retain access to the EU’s single market post Brexit, we would argue that a recovery to the 1.30 area still looks to be a long way away”.As of writing the pair is gaining 0.20% at 1.2651 and a break above 1.2776 (high Dec.6) would open the door to 1.2784 (100-day sma) and then 1.2862 (high Oct.4). On the flip side, the immediate support aligns at 1.2623 (low Dec.5) ahead of 1.2522 (20-day sma) and then 1.2485 (55-day sma).
USD/JPY bounces off lows, back near 113.50
The greenback is weaker across the board on Thursday, with USD/JPY navigating the mid-113.00s after testing lows near 113.20 in early trade.The pair is losing ground for the second consecutive session so far against a backdrop of a persistent offered bias around the US dollar.Spot, however, keeps navigating the upper end of the recent range following the strong up move seen in November, although a break above the key handle at 115.00 the figure still remains elusive, acting as a tough resistance for the time being.In the meantime, the pair stays well correlated to the performance of the yields of the US 10-year benchmark, while JPY speculative positioning has become net short for the first time this year during the week ended on November 29 as shown by the latest CFTC report.Data wise, US Initial Claims are only due later in the day although the ECB meeting during the European afternoon is poised to drive the sentiment in the global markets today.As of writing the pair is losing 0.11% at 113.52 facing the immediate support at 112.84 (low Dec.5) ahead of 111.85 (20-day sma) and then 111.32 (low Nov.28). On the upside, a surpass of 114.83 (high Dec.1) would open the door to 114.89 (high Feb.14) and finally 116.86 (78.6% Fibo of the 2016 drop).
NZD/USD clings to strong gains for second straight session
The NZD/USD pair maintained its strong bid tone for the second consecutive session and jumped back above 100-day SMA to hit a 4-week high. The pair, however, has retreated from session peak and is currently hovering around 0.7200 handle. During Asian session on Thursday, the pair caught fresh bids after RBNZ Governor Graeme Wheeler offering less dovish picture for NZ Economy and said that interest rates were low enough to return inflation to his 2 percent goal amid a robust economic expansion. Wheeler's comments diminished prospects of any further monetary easing by RBNZ in the near-future and lifted the pair to its highest level since Nov. 11. Moreover, upbeat Chinese imports and exports data eased concerns of an immediate economic slowdown in the world's second largest economy and boosted demand for riskier / higher-yielding currencies - like the Kiwi.Later during European session, ECB monetary policy decision is expected to infuse volatility in the FX market and provide fresh impetus for the major ahead of US economic docket featuring usual weekly jobless claims data, later during NA session.From current levels, 0.7228 (Nov. 11 high) seems to act as immediate resistance above which the pair is likely to dart towards 0.7260-65 resistance area en-route its next major hurdle near 0.7300 handle. On the downside, 0.7165 area now becomes immediate support to defend, which if broken is likely to accelerate the slide towards 0.7125 support before the pair eventually breaks below 0.7100 handle and aim towards testing 0.7085-80 strong horizontal support.
EUR/JPY consolidating in a narrow band, awaits ECB decision
The EUR/JPY pair extended its consolidative move just below 6-month high touched on Monday and remained confined within a narrow trading band ahead of the much awaited ECB decision.Currently trading around 122.30 region, the cross was seen consolidating Monday's sharp rebound from the vicinity of 200-day SMA, tested in the aftermath of a 'No' vote on the Italian Referendum on Sunday. The cross subsequently surged to the highest level since early June but struggled to gain further traction as investors now cautiously await for this week's key event risk, ECB monetary policy meeting, later during European session.The outcome of Italian Referendum heightened the need for the central bank to extend or even expand its EUR 80b a month asset purchase program, beyond its scheduled end in March. However, should the central bank hint towards tapering its asset purchase program should boost the shared currency across the board and provide fresh impetus for the pair's strong upward trajectory witnessed since the beginning of last month. "The pair failed to take out 123.07 (38.2% of Jul 2008 high - Jul 2012 low) - 123.36 (monthly 100-MA). The cross is overbought as per the daily RSI. The daily MACD suggests the bullish momentum is running out of steam. Thus, sideways to negative action in the range of 120.50-123.00 is likely in the short-run. On the higher side, a break above 123.36 would open doors for 125.00 levels. On the lower side, only a dip below 120.00 levels would suggest the rally from the June low of 109.42 has ended."
USD/CAD drops to 2-month lows near 1.3200
The Canadian dollar is extending its upside momentum vs. its American peer on Thursday, now dragging USD/CAD to test fresh 2-month lows near the 1.3200 handle.Spot is accelerating its weekly decline to the area of the key support at 1.3200 the figure, although it has managed to pick up some pace soon afterwards. The weekly bias remains well into the bearish camp nonetheless, reaching fresh 2-month lows in response to the recent rally in crude oil prices and retreating for the second week in a row.In fact, the West Texas Intermediate is up smalls so far today, trading just below the critical $50.00 mark per barrel after reaching 2016 tops beyond the $52.00 limestone on Monday.On the data front, market participants seem to have already digested the overall neutral stance from the BoC at yesterday’s meeting, while Housing Starts and Building Permits are due later in Canada. South of the border, Initial Claims are only expected.As of writing the pair is losing 0.09% at 1.3224 and a breach of 1.3207 (low Dec.8) would open the door to 1.3194 (100-day sma) and finally 1.3065 (200-day sma). On the other hand, the next resistance lines up at 1.3311 (38.2% Fibo of the 2016 drop) followed by 1.3357 (high Dec.5) and then 1.3414 (20-day sma).
Gold reverses tepid recovery gains
Gold failed to build on Wednesday' tepid recovery move and has now drifted into negative territory, reversing early minor gains to $1178.50 region, ahead of key monetary policy decisions from two of the most influential central banks, ECB on Thursday and FOMC next week. Currently trading around $1174 region, testing session lows, the precious metal intially benefited from a mild US Dollar retracement as investors seemed to adjust their positions ahead of next week's Fed meeting. A weaker greenback tends to boost demand for dollar-denominated commodities - like gold.The metal's mild recovery momentum, however, lacked conviction as market remain convinced that the Fed would certainly raise interest-rates at next week's meeting and would opt for steeper rate-tightening path in the near-future. Hence, focus would be on the accompanying Fed rate-statement, where markets will look for updated projections, especially 'dot plots' in order to evaluate possibilities and timing of next Fed rate-hike action. CME group's FedWatch Tool is currently pointing to 50% probability of another Fed rate-hike move in June and should the central bank outlook reinforce market expectations, it is likely to attract fresh selling pressure around the non-yielding yellow metal. In the meantime, ECB monetary policy decision-led volatility in financial markets would derive the metal's safe-haven demand and eventually provide some impetus on Thursday. Immediate downside support is pegged at $1170 region, which if broken decisively is likely to drag the metal back towards $1160 strong support. A sustained weakness below $1160 support is likely to turn the commodity vulnerable to break through 10-month lows support near $1157 level and head towards testing its next major support near $1152-50 region. On the upside, $1178-80 region seems to have emerged as immediate resistance above which the metal is likely to extend the recovery trend immediately towards weekly high resistance near $1188 region before aiming towards its next major hurdle near $1195-97 region.
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