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NFP could be less exciting in December but dollar may not care – Forex News Preview

 
The US is scheduled to publish its final Nonfarm payrolls report (NFP) for 2019 on Friday at 12:30 GMT and despite the ups and downs during the year and a potential slowdown in employment growth this week, the labor market is expected to have maintained a robust profile, reducing the odds for a more accommodative monetary policy. The dollar, though, may consider the data outdated, probably showing little volatility in the aftermath.

 

NFP forecasts

 

Sharp dips in employment growth during 2019 mirrored the elevated business uncertainty about the future of the US economy in the face of the bitter US-China trade war and a slowing global growth. In November, however, nonfarm payrolls unexpectedly spiked above 200k to a 10-month high as General Motors’ striking employees returned to work and the healthcare sector boosted hiring, relieving markets that the jobs market is still holding its ground. A fall back in the unemployment rate and upward revisions to the October and September readings added more sparkle to the NFP report.

 

 

This week, the December delivery may not be as glamorous as the preceding one but could still be representative of a tightening labor market and of a resilient economy. Particularly, expectations are for an employment growth of 165k which is above the 100k threshold required to keep up with a growing working-age population and a steady unemployment rate at a 50-year low of 3.5%. In terms of wages, average hourly earnings are forecast to increase by 0.3% month-on-month compared to 0.2% in November, keeping the yearly rate flat near decade highs at 3.1% for the second consecutive month.

 

The December ISM Manufacturing PMI survey released last week has already warned investors that a muted set of employment numbers on Friday is possible. The index, which is a widely watched indicator of recent manufacturing activity, tumbled to fresh lows in the contraction area, falling from 48.1 in November to a decade low of 47.2, with sub-indices such as the employment index following suit. Note that the measure should fall below 43 to flag a wider economic recession.

 

 How the Fed will react?

 

Nonetheless, the Fed believes that conditions in the US labor market could get even better citing the progress in the US-China trade war and more clarity on the Brexit front. But it has clearly messaged that interest rates will not change in either direction in the foreseeable future even if inflation rises above its 2.0% target. Therefore, Friday’s NFP readings may not affect the Fed’s stance. Instead policymakers will wisely wait and see whether the cocktail of the current lower interest rates and a less risky trade environment – once the US-China and the new NAFTA trade deals get signed – will boost business and consumer confidence in the first quarter of 2020 , with inflation and manufacturing and services PMI data eagerly watched for any signs of strength. For now, the aforementioned indicators continue to show symptoms of a deteriorating economy. The inversion of the 10-year and 3-month US Treasury yields in August is another reason why the outlook for the US economy remains somewhat suspicious.

 

 

Where now for the dollar?

 

As the focus turns to 2020 data, the dollar may show muted reaction to the December NFP report that may be considered outdated. Recall that the downbeat ISM manufacturing and services PMI figures released last Friday and Tuesday respectively moved little the greenback.

 

Nevertheless, surprises happen and investors could keep in mind the 107.80 level in the USDJPY market if the jobs data disappoint significantly. On the other hand, stronger-than-expected readings would keep attention on the 109.50 area and the resistance trendline that has been holding since September 2018.

 

In Wall Street, a beat in the data and specifically on the wage front could be negative for US stocks and for the S&P 500 as this would translate to higher costs for US corporations and vice versa.

 

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Loonie braces for Canadian jobs data and Poloz’s speech – Forex News Preview

 
The latest employment figures out of Canada will be released at 13:30 GMT on Friday. Recent data have been disappointing, which puts extra emphasis on the upcoming numbers to either confirm that the economy is losing steam or dispel such concerns. As for the loonie, the risks surrounding its reaction seem asymmetric, with any disappointment generating bigger losses compared to the corresponding gains in case the data beat expectations. Separately, BoC Governor Poloz will speak today at 19:00 GMT, and there’s a risk he strikes a dovish tone.

 

Diamonds in the rough

 

The Canadian economy defied the odds in 2019, taking very little damage from global trade tensions despite relying heavily on commodity exports. The local central bank was therefore among the only ones in the developed world that didn’t cut rates, which helped the Canadian dollar close the year as the best performing major currency. Strong gains in oil prices – the nation’s biggest export – certainly played a big role too.

 

Yet, this cheerful narrative came into doubt in the final weeks of 2019, as incoming data started to fall short of expectations. The labor market recorded its worst month since the global financial crisis in November, unexpectedly shedding 71k jobs, which pushed the unemployment rate up to 5.9%, from 5.5% prior. Retail sales also fell sharply in October, raising concerns about consumption.

 

Noise or trend?

 

The run of soft data has traders questioning the broader outlook for the economy – are these early signs of more weakness to come, or just ‘noise’ in an otherwise healthy trend? The upcoming employment data will be crucial in determining which side investors pick in this debate, and the loonie will move accordingly.

 

 

In December, the labour market is expected to have added 25k jobs, while the unemployment rate is forecast to tick down to 5.8%. Even though that would only make up for roughly one third of the positions lost in the previous month, it would still be a welcome development.

 

Lopsided reaction?

 

Now in terms of the risks surrounding the loonie’s reaction, they appear asymmetric. A potential disappointment could generate a bigger negative reaction in the currency, compared to the equivalent positive reaction if the jobs numbers beat forecasts.

 

The reasoning is how markets are positioned. Investors currently assign just a ~30% probability for a Bank of Canada (BoC) rate cut by June, so there is a lot more room for that chance to increase on weak data than there is for it to decline on strong numbers. In other words, markets are still of the view the BoC won’t act anytime soon, so anything that changes this narrative would come as a major surprise and could therefore generate a bigger reaction in the loonie.

 

Mind the Poloz risk too

 

Another similar risk for the loonie is a speech by BoC Governor Stephen Poloz today at 19:00 GMT. The BoC chief was optimistic about the economy when he last spoke, but considering the run of soft data since, there is a clear risk that his comments are on the dovish side this time. He could, for example, acknowledge the recent weakness and highlight that his central bank would consider cutting rates if it persists, which also presents a downside risk for the loonie.

 

 

Looking at dollar/loonie technically, initial resistance to advances may be found at 1.3100, where an upside break could open the door for a test of 1.3170.

 

On the downside, the first target for the bears may be the 1.3035 zone. If they pierce below, the 1.2950 area may come into play ahead of the 1.2910 hurdle, marked by the low on October 17, 2018.

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USDCNH extends downtrend to 5-month low; searches for a rebound

USDCNH has been developing in a downtrend since the peak at an all-time high of 7.193 in early-September, with the price retreating below the 200-day exponential moving average (EMA) to touch a five-month low at 6.9156 on Thursday.

The sell-off is looking overstretched according to the RSI which seems to be rebounding near its 30 oversold mark and the fact that the 50% Fibonacci of the 6.6686-7.193 upleg is in the neighborhood, further increases the case for an upside correction in the price. Yet with a bearish cross between the 20- and the 200-day EMA being in progress, the odds for a trend reversal seem less likely.

Should the buyers take over, the 200-day EMA could provide the key for more upside ahead of the crucial 7.000 level. Running higher, the 23.6% Fibonacci of 7.0697 would potentially come next into view, where another violation would doubt the strength of the ongoing downward pattern.

If sellers dominate, immediate support could arise near the familiar 61.8% Fibonacci of 6.8692. Crossing that barrier, 6.8258 is the nearest obstacle to keep next in mind.

Summarizing, USDCNH seems to be searching for a rebound near a key restrictive area, though only a decisive rally above the 7.0697 number would convince traders that the downtrend in the medium-term picture is fragile. 

 

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GBPJPY may realign with positive picture despite consolidation

GBPJPY appears to have stalled below the flat lines of the Bollinger bands, but buyers are attempting to overtake the mid-band at 143.08, after the bounce off the lower-band. The fresh positive push seems to also be aided by the bullish crossover of the 200-day simple moving average (SMA) by the 100-day one.

The short-term oscillators reflect the stall in the market but lean towards a positive view. The MACD, is slightly above the zero level but only just below its red trigger line, while the RSI is marginally improving above its neutral mark. Moreover, the stochastics are bullish and are approaching the overbought region.

To the upside, immediate resistance could come from the 143.60 level, which is the 76.4% Fibonacci retracement of the down leg from 148.86 to 126.53, and the high of 144.35. Overcoming these, the upper-Bollinger band at 145.57 could cease any further advances towards the nine-month high of 147.95 and the peak of 148.86 from March 2019.

If sellers reemerge and steer below the 50-day SMA at 141.70, a more sustained effort from the bears would be needed to breach the fortified support region of 141.15 to 140.34, which includes the lower-Bollinger band and the uptrend line drawn from September 3. Diving below, the 138.85 support from October 24 could obstruct the pair from reaching another tough barrier at the 50.0% Fibo of 137.70, where the bullish crossover resides.

Summarizing, the very short-term bias seems to be neutral-to-bullish and a close above 144.35 would strengthen the positive picture, while a push above 145.57 would cement further gains.

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Dollar Index futures bulls may face big challenge near the flat 200-day SMA

 
The US dollar index futures rose above the short-term 20-day simple moving average (SMA) and is approaching the 40-SMA, creating the fourth green day in a row. The price is still developing within a downward sloping channel since October 2019.

 

The fast Stochastics and the RSI, signal that the bearish action is running out of fuel and hence a rebound of the price off the line is likely as the indicators are moving up. Furthermore, the MACD oscillator surpassed the trigger line, completing a bullish crossover and is heading towards the zero level.

Should the bulls continue to buy the index, it could have a quick test of the 200-day SMA, which overlaps with the 97.40 level. Running higher, the next stop could be the 100-day SMA currently at 97.70 before testing the 97.80 resistance. A stronger rally could help the price to exit the downward channel, shifting the medium-term bearish bias to bullish.

Otherwise, a decisive close below the 20-SMA could open the door for the latest low of 96.00. Further losses, could drive the index until the next crucial barrier of 95.34, reached on June 2019.

To sum up, US dollar index futures are looking bearish with a risk of an upside reversal as indicators are getting stronger.  

 

 

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EURUSD pushes for a rebound but bulls waiting above 1.1200

EURUSD started the year on the negative side, closing with marginal losses for the second week. The pair, however, managed to pause its sell-off near the 50-day simple moving average (SMA) on Friday, where the 38.2% Fibonacci of the 1.1411-1.0878 downleg is located, retaining at the same time its upward direction off the 28-month low of 1.0878 alive.

The 50% Fibonacci of 1.1144 is currently in target as the reversing RSI and the Stochastics are endorsing the recent positive correction in the price. Yet, for traders to resume buying appetite, a decisive rally above the 1.1200 level and the 61.8% Fibonacci would be an ideal move. In such a case and if the price surpasses its 5-month peak of 1.1238, the door would open for the 78.6% Fibonacci of 1.1297.

Alternatively, if the bears drive below the 38.2% Fibonacci of 1.1080, attention will turn to the short tentative ascending trendline, where any violation could trigger a sharper decline probably towards the 23.6% Fibonacci of 1.1000. Further down, the area around 1.0940 may act as support too before the spotlight shifts to the 1.0878 bottom.

Meanwhile, it would be interesting to see whether the 20-day SMA will finally register a bullish cross with the 200-day SMA after crossing below it on May 2018.

Summarizing, EURUSD is searching for a rebound, though only a significant rally above 1.1200 would give the lead to the bulls. In the medium-term picture, the pair is holding an upward direction which would come under evaluation if the price approaches the tentative supportive trendline. 

 

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Gold retreats within Ichimoku cloud; bears take control in near term

Gold has declined considerably over the last couple of trading days after the touch on the almost seven-year peak of 1,611 on January 8. The price entered the Ichimoku cloud and is capped by the bearish crossover within the short-term 20- and 40-period simple moving averages (SMAs), assuming a negative correction.

The technical indicators in the 4-hour chart seem to be neutral to bearish. The RSI indicator has just dropped beneath the 50 level with nearly flat momentum, while the MACD oscillator is moving sideways around the zero level. However, the stochastic bounced off the 80 territory and created a negative cross between the %K and %D lines.

Immediate support to further downside pressure may be taking place around the 38.2% Fibonacci retracement level of the upward wave from 1,450 to 1,611, near 1,550 and the 1,540 mark, which could provide additional support in case of steeper losses.

Should the price decisively close above the roof of the 1,563 resistance, the 20-period SMA could move towards the 23.6% Fibo of 1,573. Further advances above this level could then target the area around the seven-year high of 1,611, extending the medium-term uptrend.

All in all, the yellow metal is creating a retracement to the downside, confirmed by the momentum indicators in the near-term.

 

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EURCHF bears face big challenge around 32-month low

EURCHF found some footing around the 32-month low of 1.0780 last week and returned inside the trading range from 1.0810 to 1.1055.

The MACD seems to be losing momentum below its red trigger line, the RSI is still hovering around its 30 oversold mark and the red Tenkan-sen is sloping down as well, while the blue Kijun-sen is still flattening, all signaling a more cautious trading in the short-term.

Should weakness extend below the 32-month low of 1.0780 mark, support to downside movements could be initially detected within the 1.0620 – 1.0650 area, identified by the bottom on February 2017 and April 2017.

Alternatively, the pair needs to overcome the 1.0830 barrier taken from last week’s highs and the low on September 25 to meet a key barrier near the 20-day simple moving average (SMA) currently at 1.0865. The 1.9000 – 1.0910 strong resistance area, which encapsulates the 40-day SMA could act as resistance too before a more important battle starts near the 23.6% Fibonacci of the downward wave from 1.1470 to 1.0780 around 1.0945.

In brief, EURCHF maintains a neutral profile over the last six months in the medium-term. However, in the short-term the pair remains negative.

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EURJPY hovers below 6-month peak; holds in ascending channel

EURJPY has been trading within an upward sloping channel after the rebound on the 28-month low of 115.85, reached on September 2019. Currently, the price is trading close to yesterday’s six-month high of 122.75, having pulled back slightly.

The near-term bias is looking neutral-to-bullish as the RSI is flatlining above the 50-neutral level, while the MACD oscillator posted a positive crossover within its trigger line above the zero area. Moreover, the bullish crosses within the 20- and 40-simple moving averages (SMAs) and the 40- and 100-SMAs are still standing, suggesting more gains.

Should EURJPY make another run higher, it’s likely to meet resistance at 123.35, identified by the high on July 2019. A successful break above this key resistance area would open the way for the upper surface of the channel near the 124.10 barrier, registered on May 2019.

If the soft positive momentum fails to hold and prices turn lower, the 20-day SMA at 121.60 is the nearest support that could halt steeper declines. A potentially more important support, though, is the 23.6% Fibonacci retracement level of the upward movement from 115.85 to 122.75 at 121.13, which overlaps with the 40-day SMA. If breached, it would shift the focus to the downside and prices would slip towards the 38.2% Fibo of 120.10 and the 120.00 handle.

In the bigger picture, EURJPY would need to make a sustained climb above 127.50 (peak on February 2019) for the outlook to become convincingly bullish.

 

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AUDUSD retreats below short symmetrical triangle

 

AUDUSD is slipping below a short symmetrical triangle formed between the 20- and the 50-period simple moving averages (SMAs) in the four-hour chart. However, the fact that the 20-period SMA is preparing to cross above the 50-period SMA is still sending some possible trend signals if completed.

In momentum indicators, signals remain neutral to bearish as the RSI is pointing downwards below 50, while the MACD keeps flattening around its red signal line.

Should sellers dominate below the 0.6880 restrictive area and the 200-period SMA, the spotlight will shift to the 0.6848 bottom, where any significant violation would mark a lower low in the January downfall, questioning the strength of the uptrend that started from the 0.6753 trough. In this case, the market could head for a retest of the 0.6800 round level if the 0.6830 barrier is breached too.

In the event of an upside correction, traders could look for immediate resistance near the 38.2% Fibonacci of 0.6918 of the downleg from 0.7031 to 0.6848, where the price topped earlier this week. A decisive close above the 50% Fibonacci of 0.6940 could add more legs to the rally, bringing the 61.8% Fibonacci of 0.6960 into view ahead of the 0.7000 number.

In short, AUDUSD is holding a neutral-to-bearish bias and only a spike above the 50-period SMA and the symmetrical triangle could return buying appetite.  

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USDJPY bulls trapped below 110.00 after breaking resistance trendline

USDJPY is stuck below the 110.00 level after closing above the strong resistance trendline stretched from mid-September 2018.

In the short-term, the pair is expected to trade with caution as the slowdown in the RSI’s positive momentum, which is currently near its former peaks, and the negative intersection between the Stochastics in the overbought area, suggest that the bullish action may be running out of steam.

If the price retreats, the resistance trendline should turn a support area to verify the significance of its upward violation. Failure to hold above the line would shift attention to the 109.00 level where the upper surface of the Ichimoku cloud is currently placed, while below 108.40, which is the 50% Fibonacci of the 112.39-104.44 downleg, more losses could follow probably towards the 107.80 barrier and the 38.2% Fibonacci of 107.48.

Otherwise, a rebound near the previous high of 109.70 and a decisive rally above 110.00 would concrete the medium-term upward pattern off the 34-month low of 104.44, letting resistance move up to 110.70, whilst a steeper upside could also test the 111.40 mark ahead of the 112.39 top.

Summarizing, USDJPY is likely to remain muted in the short-term if the 110.00 keeps exerting downside pressure and positive in the medium-term if it manages to hold above 109.70. 

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NZDUSD maintains bearish picture in very short-term

NZDUSD traded with losses over the last two weeks, following the pullback off the five-month high of 0.6754 and now, it is creating a downward sloping channel.

Currently, the price is trading slightly above the short-term simple moving averages (SMAs) near the return line of the channel. The RSI on the 4-hour chart is missing direction in positive area, while the MACD oscillator is moving higher, approaching the zero line. Also, the red Tenkan-sen keeps flattening below the blue Kijun-sen line, reducing chances for a meaningful recovery in the short-term.

However, should the price close comfortably below the 20-period moving average (SMA) at 0.6620, that could push the market down to 0.6590, which is the 38.2% Fibonacci of the upleg from 0.6320 to 0.6754 and which overlaps with the 200-period SMA. Even lower, the 0.6553 support and the 50.0% Fibo of 0.6520 could attract sellers’ attention.

On the other side, an upward break of the descending channel could open the door for the 23.6% Fibo of 0.6652, which stands inside the Ichimoku cloud. More upside pressures could hit the upper surface of the cloud at 0.6678.

In brief, NZDUSD is in bearish mode in the very short-term timeframe and bullish in the bigger picture. 

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USDCHF slips to 15-month low; oversold signals strengthen

USDCHF having cracked below the 2019 trough in the last minute in December it ticked to 15-month low of 0.9612 on Friday.

The bearish short-term bias remains intact but oversold signals are strengthening now as the RSI is testing the 30 level and the Stochastics are diving below 20, while the price itself is already close to the lower Bollinger band, all hinting that the negative action may be running out of steam.

The middle Bollinger band currently at 0.9729 could cape upside corrections as it did from December onwards. In case it leaves the door open, the bulls could pick up steam to meet resistance near the 50-day simple moving average (SMA) that is currently placed near the upper Bollinger band and the 0.9830 level. If the 200-day SMA at 0.9940 is breached too, then a retest of the 0.9994-1.0027 region could happen.

Beneath the 0.9612 trough there is another obstacle at 0.9540, a break of which may confirm additional losses probably towards the 0.9430 tough barrier that strongly rejected upward movements during the 2016-2018 period.

Meanwhile in the medium-term window, the negative outlook deteriorated after the market marked another lower low below 0.9658, with the falling 50-day SMA that failed to climb above the longer-term 200-day SMA backing the bearish view.

In short, USDCHF is bearish overall with the potential for an upside correction in the short-term. 

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EURUSD drops below 200-day SMA; focus on supportive trendline

EURUSD’s pullback from the 1.1238 top has again been interrupted by the 50-day simple moving average (SMA). That said, a bearish crossover of the Kijun-sen line by the falling Tenkan-sen line backs a negative view. The pair is currently flirting with a key support area around 1.1092 to 1.1082 involving the 50-day SMA and 38.2% Fibonacci retracement of the down leg from 1.1411 to 1.0878.

The short-term oscillators reflect a pause in the market but lean towards a negative picture. The MACD, in the positive zone, has declined below its red trigger line until the zero level, while the RSI is hovering underneath its neutral mark.

To the downside, managing to slip below the key area of 1.1092 to 1.1082, a more sustained push would be required to surpass another important barrier around the 1.1065 level, which is where the flat 100-day SMA has merged with the upper boundary of the Ichimoku cloud. Steering underneath the supportive trendline, the swing low of 1.1039 could prevent the drop towards the 23.6% Fibo of 1.1005 and trough of 1.0980.

If buyers pivot the price off the 50-day SMA at 1.1092, initial resistance could come from the 200-day SMA at 1.1132 and the nearby 50.0% Fibo of 1.1145. Next, the 1.1175 obstacle may apply some downside pressure as it is a level that has held several times in the past. Climbing higher, the 61.8% Fibo of 1.1208 could draw attention ahead of the 1.1238 and 1.1249 peaks.

Summarizing, the very short-term bias is neutral-to-bearish. As all SMA’s are mostly flat, the price may adopt a sideways move to test the supportive trendline before a clearer direction evolves.

 

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EURAUD looks flat as momentum has vanished

EURAUD is consolidating around the 1.6103 level, which is the 76.4% Fibonacci retracement of the up leg from 1.5893 to 1.6784. With directional momentum nonexistent and the simple moving averages (SMAs) converging around 1.6170, the sideways market may drag on for a while longer, holding the pair between 1.6340 and 1.5964.

The MACD, although in the negative zone, is above its red trigger line and approaching zero, while the RSI is hovering at its neutral mark.

To the upside, immediately restricting upside movement is the 20-, 50- and 200-day SMAs which are meeting at 1.6170. If buyers overcome this obstacle, the 61.8% Fibo of 1.6234 could be next to deter a fresh test of the 1.6292 high and the significant level overhead at the 50.0% Fibo of 1.6340. Conquering the 1.6340 level, the pair may rally towards the 38.2% Fibo of 1.6444 and the swing high at the 1.6500 handle.

Otherwise, if sellers pierce below the 76.4% Fibo of 1.6103, the decline could reach the 1.5964 low, which sellers failed to pierce at the end of last year. A violation below could see the 1.5904 and 1.5893 lows challenge the bears’ attempts to shoot for the 1.5805 trough of 26 April 2019.

Summarizing, the short-term bias is neutral, confined between the 1.6340 and 1.5964 levels. A break either above or below would set the next direction.

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GBPUSD’s retracement turns sideways; nears ascending trendline

GBPUSD looks to be a bit flat around the 1.3010 level, which is the 38.2% Fibonacci retracement of the up leg from 1.2194 to 1.3514. With the recent lower highs and higher lows, the pair could extend its sideways nature further into the Ichimoku cloud and possibly down towards the lower band of the cloud and the supportive trendline.

The technical indicators suggest that directional momentum has evaporated but favor a very short-term negative move. The MACD is below its red trigger line and has slipped below the zero mark, while the RSI hovers slightly underneath its 50 level. Also backing the very short-term negative view is the downward sloping Tenkan-sen line. Nevertheless, traders need to be aware of the bigger positive move displayed by the 50- and 100-day SMAs.

Steering lower, an initial key support area from the low of 1.2904 to the 50.0% Fibo of 1.2856 – which also encapsulates the supportive trendline – could challenge the bears. Diving down, the pair may test the 100-day SMA and nearby trough of 1.2768. Surpassing this, a strengthened level at the 1.2700 handle, where the 61.8% Fibo and 200-day SMA reside, could attract traders’ attention.

Alternatively, successfully pushing above the obstacles at the 1.3010 area, the 1.3117 resistance overhead could apply some downside pressure ahead of the 23.6% Fibo of 1.3203. Climbing up, the 1.3283 swing high from the end of 2019 may halt further advances towards the 1.3381 resistance and the nineteen-month peak of 1.3514.

Overall, the short-term bias is neutral-to-bullish and if the supportive trendline holds, the pair would realign with the medium-term positive outlook.

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USDMXN appears bearish, capped by restrictive trendline

USDMXN pierced under the low of 18.73 from 17 October 2018 and is currently testing the trendline, limiting upside corrections drawn from December 3, 2019. Further backing the negative picture is the downward sloping 50- and 100-day simple moving averages (SMAs) and the near completion of a bearish crossover of the 200-day SMA by the 100-day one.

That said, the short-term oscillators are reflecting mixed signals for now. The MACD, in the negative region, is above its red trigger line but is looking to return below it. On the other hand, the RSI has bounced off the 30 level and is rising. Traders just need to be vigilant in case the trendline holds and sellers pick up.

To the downside, immediate support could come from the fresh low of 18.64 ahead of the support of 18.50 from October 2018. Surpassing this, the 18.40 trough from August 2018 could halt a dive deeper towards the 17.94 low from back in April 2018.

Alternatively, if buyers break above the restricting line around 18.73, the next resistance could come at 18.87. Pushing higher, the resistance region of 19.00 to 19.04, encapsulating the 50-day SMA could impede the test of the inside swing low of 19.18. Slightly above, the 19.23 area, where the bearish cross resides, could deny further gains towards the 19.42 obstacle.

Overall, the short- and medium-term biases are bearish below 18.73 and the trendline. However, a shift above could return a neutral bias.

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AUDUSD appears to be improving; aided by uptrend line

AUDUSD is currently finding substantial upside pressure at the 0.6827 level, which is the 38.2% Fibonacci retracement of the down leg from 0.7081 to 0.6670 and from the 100-day simple moving average (SMA) marginally above. Furthermore, the price is retesting a broken downtrend line drawn from December 2018 and the tentative uptrend line pulled from the multi-year low of 0.6670, which is aiding the above outlook.

The short-term oscillators reflect mixed signals in directional momentum. The MACD is declining further below its red trigger line and under its zero mark. However, the Stochastic %K line pivots and points up in the oversold region. That said, the upward sloping 50- and 100-day SMAs and the near completion of the bullish crossover of the 200-day SMA by the 50-day one could warrant some caution for upside corrections.

If buyers resurface and drive the pair over the 100-day SMA, a fortified barrier at 0.6876 – which is where the approaching bullish crossover and 50.0% Fibo reside – could challenge the bulls ahead of another restricting area from the 61.8% Fibo of 0.6924 to the 0.6938 resistance. Overtaking this region, the 0.7031 peak and 0.7047 nearby obstacle could deny further advances.

Alternatively, sellers would immediately need to surpass the tentative uptrend line and the 38.2% Fibo at 0.6827, before encountering the 0.6800 handle underneath. Clearing this, the trough of 0.6753 could halt further losses towards the swing lows of 0.6723 and 0.6709 ahead of the 0.6686 and 0.6670 multi-year lows.

Overall, the short-term bias is bullish above the tentative uptrend line with a break above 0.6876 reinforcing the positive picture, while a break above 0.7031 would cement this view.

 

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XM
Posts: 38
 XM
(@xm)
Eminent Member
Joined: 1 month ago

USDJPY remains bullish despite recent correction

 
USDJPY’s positive picture seems to be losing some fuel in the recent push up from the 107.76 level.

The short-term oscillators suggest that the negative momentum is picking up. The MACD, in the positive region is only just above its red trigger line, while the RSI has dropped to its neutral mark. The Stochastics look bearish with the declining %K line distancing itself below its %D line and into the oversold region. That said, the fresh bullish crossover of the 200-day simple moving average (SMA) by the 100-day one and the upward slopes of the 20-, 50- and 100-day SMAs, hint that the bounce off the 104.45 low could extend a while longer.

If buyers resurface and push over the 109.72 resistance, first to challenge the climb is the nearby 110.28 high. Overrunning this, a more sustained move would be required to overcome the area from the 76.4% Fibonacci retracement of the down leg from 112.39 to 104.45 of 110.52 to the peak of 110.67 from 21 May 2019. Moving higher, the gap from May last year of 110.95 to 111.04 could prevent the price from testing the 111.68 resistance.

To the downside, initially the 61.8% Fibo of 109.36 coupled with the 20-day SMA could be the first to apply the brakes. Steering lower, the 50-day SMA at 109.17 could apply some friction ahead of a significant support region from 108.66 to 108.42 – which also encapsulates the 200-day SMA – involving the 100-day SMA and the 50.0% Fibo respectively.

Summarizing, the short- and medium-term picture continue to reflect a bullish bias and a shift only below the area of 107.76 to 107.49 would throw the outlook into question.

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XM
Posts: 38
 XM
(@xm)
Eminent Member
Joined: 1 month ago

EURNZD in a slippery slope; bears look at 5-month low

EURNZD is holding to losses, slipping beneath the short-term moving averages in the daily timeframe. The strong sell-off day on Thursday is driving the pair towards the five-month low of 1.6615. The MACD is heading lower and is approaching the red trigger line for a bearish cross, strengthening its bearish momentum, while the RSI dropped below the 50 level with aggressive movement.

Should the price decisively close below 1.6615, this could extend the downtrend towards the 1.6520 barrier acting as support back in July 2019. More aggressive losses could send the pair even lower to 1.6290 mark, taken from the trough on March 2019.

On the other hand, an increase could meet the 20-period moving average currently at 1.6742 and the 40-period SMA at 1.6820. In addition, the Ichimoku cloud is a major resistance for the bulls between the mentioned SMAs. Above those levels, the pair could reach the 23.6% Fibonacci retracement level of the downleg from 1.7700 to 1.6615 near 1.6870.

All in all, the market is expected to hold bearish in medium-term after the bounce off the 1.7700 handle.

 

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