Session close: Settled at 1.1922, up 54.5 ticks
Fundamentals: The Euro moved higher for much of the session but saw further strength as tax-reform went to a vote in the House. Despite getting passed, the bill violated a Senate rule and even though the Senate is still scheduled to vote tonight, the House must vote again tomorrow after making provisions. Ultimately, the Senate is and has been the key hurdle for Republicans to get a bill to the President’s desk before Christmas. If the vote gets through the Senate the Dollar should see a short-term bump. The Euro has seemed to gravitate higher despite the prospect of tax-reform in the U.S and this is exactly what we have been predicting. Our belief is that growth in Europe will gain better traction next year than the priced-in growth expected in the U.S due to tax-reform. Germany announced plans early this morning to issue more bunds next year than it did this year and as yields in Europe rose, so did the currency. If you look at the Dollar, the only currency it was truly down against today was the Euro and this signals that the Euro was up on its own strength. PPI is due out of Germany tomorrow morning at 1:00 am CT. German Bundesbank President Weidman speaks at 7:00 am CT. Existing Home Sales are due in the U.S at 9:00.
Technicals: Price action trade out above first resistance today but stalled against our second level at 1.1920-1.1931 with a session high of 1.1925. We referred to this area and R3 above yesterday as a thick net. However, the truly significant levels for the longer-term trend are 1.1998 and 1.20435; a close above here will spark the next bull leg to 1.22 and potentially above. First key support comes in at 1.1859-1.1877 and pull backs to this area should present buying opportunities. Our line in the sand to the downside remains 1.1797-1.1799.
Resistance – 1.1891**, 1.1920-1.1931**, 1.1946-1.1949**, 1.1998**, 1.20435***, 1.2180-1.22135****
Support – 1.1859-1.1877**, 1.1797-1.1799***, 1.1742**, 1.16485***
Session close: Settled at .8902 losing 32.5 ticks
Fundamentals: The Yen took it on the chin today due to rising yields in Europe and the U.S. Housing data in the U.S this morning was much stronger than expected and added to overnight pressure. The Dollar Index will not tell you the whole story of the Dollar, it was down due to the large percentage of it that is based on the Euro. With tax-reform expected to pass the Senate and then the House now, the U.S. dollar is holding steady. However, we continue to expect this to be a buy the rumor sell the fact event for the Dollar. We believe the Yen should bounce back by the end of next week. Still, the Bank of Japan needs to be on your radar as they have a policy meeting late tomorrow night.
Technicals: The bears were firmly in control of today’s session and this completely negates any smidge of potential bullish momentum around the corner. The down move must complete its test to trend line support that now comes in at .8855, support is also just below there at .8840.
Resistance – .8937-.8957**, .8984**, .9060-.9091***, .9164**
Pivot - .8902
Support – .8855**, .8840**, .8782-.8808***
Session close: Settled at .7664, down 2 ticks
Fundamentals: The RBA Minutes yesterday were upbeat on job growth and inflation. . . to a degree. Their uncertainty ultimately overshadowed their upbeat comments. Surprisingly enough, today was a quiet session for the Aussie as the lack of news hasn’t halted the recent surge and recovery in the currency. Ultimately, this signals that the bank did a good job in delivering their message at the December meeting and ahead of recent data.
Technicals: Price action remains positive as it consolidated after last week’s rally. We expect a slight pull back as it is testing against resistance and at the 200-day moving average. But merely a minor pull-back that holds against support could set up for the next rally. We believe that the low one and a half weeks ago could potentially be a multi-month low that holds through the first quarter.
Resistance – .7668**, .7724-.7728***, .7799**, .7870-.7884***
Support – .7636**, .7572-.7594**, .7498-.7501***, .7390***
Session close: Settled at .7779, down 6 ticks after running stops to the lowest level since July
Fundamentals: Price action has been vulnerable as it has just sat against major three-star support at recent lows from October and November. Much stronger than expected reads on U.S housing data was enough to push the Canadian to the brink at a low of .7752, the lowest level since July. This was a stop run, but stops did not exacerbate the move as it was equally met with buyers on uncertainty with U.S tax reform. The Canadian remains vulnerable, however, we would like to buy on strength as we remain upbeat on it in the long term.
Technicals: Price action traded into but did not breach major three-star support. Today’s test and rejection is enough to reinvigorate our slight Bullish bias though we remain cautious due to a potential bump in the U.S. dollar on tax-reform getting passed this week. We believe that if major three-star support continues to hold, it will prove to be a tremendous buying opportunity.
Resistance – .7858-.78795**, .7931-.7959***, .8022**
Support – .7730-.7754***, .7671**, 7550***