Session close for Tuesday, Dec. 26: Gained about 10 ticks
Fundamentals: The Euro has bounced back from giving up ground to finish last week after the Catalan separatists won a narrow vote. Before the futures market opened last night, there was a strong and quick wave of selling that hit the forex market, sending the Euro below 1.17. However, it recovered nearly as quick and was unchanged for the CME open. More likely than anything, this was algos taking advantage of low volume and today’s recovery and positive trade can confirm that. In the wider scheme of things, we remain Bullish the Euro and Bearish the Dollar. With tax-reform in the rear-view mirror we believe the focus in the first quarter will become a more hawkish ECB from their current stance and a more dovish Fed from theirs. This will correlate directly into Euro strength. U.S reads on Durable Goods and Michigan Consumer Confidence came in poorly on Friday while PCE was in line. We will look to Consumer Confidence along with Pending Home Sales tomorrow at 9:00 am CT. The ECB Economic Bulletin is Thursday.
Technicals: Price action on Friday traded into and held two tight levels of support at S1 and S2. The recovery into this week settles the session at the pivot which truly doesn’t give the edge to the bulls. However, the trend line from the September 8th high is now lower and today’s tape fell just shy; the lower trend line complicates the levels. For the tape to regain immediate term bullishness, it must first remain above the trend line which comes in tomorrow at 1.1955 and second close out above Wednesday’s high of 1.1976. If price action can remain above here, it should gravitate towards major three-star resistance at 1.20435; a close above here will confirm a bull leg higher. The bears look to keep price action suppressed below the pivot at 1.1946-1.1949.
Resistance – 1.1955-1.1976**, 1.20435***, 1.2180-1.22135****
Pivot - 1.1946-1.1949
Support – 1.18925-1.1912**, 1.1854*, 1.1797-1.1799***, 1.1742**, 1.16485***
Session close: Gained about 10 ticks on the session
Fundamentals: Japan posted stronger than expected data across the board last night; Household Spending, CPI and unemployment (24-year low). However, a speech from Bank of Japan Governor Kuroda and what were the Minutes from the October meeting took some wind out of the sails. Kuroda continued to emphasize keeping ultra-loose policy intact until inflation reaches 2%. Still, he acknowledged that Japan is no longer in deflation and that moderate growth is likely to continue. There a couple ways of looking at this and we are in the bull camp of a ‘glass half full’. Some BoJ council members expressed the law of diminishing returns only for Kuroda to squash these spirits. However, even after such the market has remained constructive on a technical basis. Combine this with our bearish outlook on the dollar in Q1 and much of 2018, we remain very upbeat on the yen.
Technicals: Considering the value at this level and risk versus reward with a stop below the recent low of .8847 which was between S1 and S2 we believe there to be a buy opportunity in the Yen. Price action is running shy of first resistance at the moment, but the tape has been constructive and a close out above here is likely to encourage further buying. R1 also closely aligns with the 9 and 21 day moving averages and a move higher will signal bullish momentum. Today’s session low of .8873 could even be a marker for those looking to keep risk even tighter.
Resistance – .8897-.8912**, .8937-.8957**, .8984**, .9060-.9091***, .9164**
Support – .8847-.8855**, .8782-.8808***
Session close: Gained about 15 ticks
Fundamentals: The Aussie has posted another session in the green, its 9th in the last 11 sessions since bottoming at the .75 mark. Base metals have continued their rally and are primed to do so in 2018 while Crude Oil traded to the highest level since June 2015. The Aussie is a commodity currency and strength in commodities on their own catalysts and weakness in the dollar on its is a perfect recipe for the Aussie. There is no key data out of Australia this week, but we eye Chinese Manufacturing over this coming weekend.
Technicals: The only reason we have not turned outright Bullish is due to major three-star resistance at .7724-.7728 and the Aussie is now testing it head on. This will be a critical 24-hour period to see the market response at this inflection point. The 14-day RSI is at 64 and nearing overbought. The 200-day moving average now comes in as major three-star support on a closing basis at .7673; a close back below here has a high probability for a budding failure.
Resistance – .7724-.7728***, .7799**, .7870-.7884***
Support – .7673***, .7636**, .7572-.7594**, .7498-.7501***, .7390***
Session close: Gained about 30 ticks on the session
Fundamentals: The Canadian put in a strong session trading to the highest level since December 6th on strength in commodities, mainly crude oil, which hit the $60 per barrel level. It’s a quiet week on the Canadian data front, nothing to look forward to. Traders must watch the Crude Oil trade as well as the U.S. dollar.
Technicals: We have been Bullish and remain Bullish. Friday’s reversal and steady close followed by today’s extension to new highs further confirms our Bullish Bias. Price action is now above R1 and R2 and facing off against major three-star resistance at .7931-.7959; a close out above here will confirm a bullish breakout of the two-month sideways consolidation.
Resistance – .7931-.7959***, .8022-.8044**, .8085
Support – .7865**, .7730-.7754***, .7671**, 7550***