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The euro currency has moved to a new monthly trading-high against the greenback, hitting 1.1958. The EURUSD pair has now pulled back slightly, as Italian Prime Minister Paolo Gentiloni announced the country will hold a general election on March 4, 2018. This could affect the euro, as experts predict a hung parliament, and possible market turbulence in the euro zone’s third largest economy. EURUSD traders now look to the release of key German CPI inflation data for the month of December.

The EURUSD remains intraday bullish while trading above the 1.1930 level, buyers may still push price-action towards the 1.1958 and 1.2000 resistance levels.

Should the EURUSD start to trade below the 1.1930 technical level, sellers may move the pair back towards the 1.1910 and 1.1884 support levels.

The British pound continues to climb higher against the U.S dollar, hitting 1.3460, reaching the highest trading level for sterling since December 8th. The GBPUSD pair currently trades around the 1.3450 level, as buyers retain firm control of price-action, as the greenback sinks lower. Traders continue to sell the U.S dollar index, with the 92.60 mark the latest key downside technical support level to be broken overnight. With a lack of macroeconomic data coming from the U.S and UK, year-end trading flows are likely to dominate trading action on Friday.

The GBPUSD pair is strongly bullish while trading above the 1.3440 resistance level, upside targets remain 1.3500 and 1.3550 levels.

Should price-action on the GBPUSD pair trade below the 1.3440 level, sellers are likely to target the 1.3426 and 1.3400 support regions.

On Thursday, all the major cryptocurrencies slumped following reports that South Korea was planning a crackdown on exchanges.

Ripple was an outlier with its price surging by more than 20% to reach an all-time high of $1.39 wherein it officially became the third largest cryptocurrency in the market.

Bitcoin dropped by 8%, Ethereum by 4% and Litecoin by 11%.

Ripple's gain was attributed to the news from Japan where SBI Ripple Asia created a consortium to bring Ripple's blockchain technology to the Japanese market. In the past, Japanese banks have supported technology that speeds up money transfers.

In this chart, yesterday, Ripple's surge led to a breakout of the previously formed near-perfect horizontal support and resistance pattern (shown in red lines).

After the breakout, the price established a new support and resistance level at $1.3504 and $1.3948. Traders may expect the price to touch the psychologically important level of $1.4000 before seeing a significant correction, which could take the price back to the $1.3504 level.

The year 2017 could go out on a whimper this Friday, as a dearth of economic data keeps investors on the sidelines. It has been a relatively quiet week for the financial markets amid the holidays. This will likely continue in the final session of the week as market participants hold out until after the new year.

Action begins at 08:00 GMT with a report on Spanish inflation. Spain's harmonized index of consumer prices (HICP) is expected to rise 1.5% annually in December, down from the previous month's 1.8% increase.

One hour later, the Italian government will report on producer inflation for the month of November. In a separate report, the Spanish government will issue its current account balance for the month of October.

The Greek government will report on retail sales and producer inflation at 10:00 GMT. The retail sales report will cover October, while the producer data will be for the month of November.

Germany will issue its latest inflation report at 13:00 GMT. Germany's HICP is expected to rise 1.4% year-over-year, down from 1.5% the previous month. The consumer price index (CPI) is forecast to rise 1.5% annually.

Energy traders will be closely monitoring the weekly rig count data courtesy of Baker Hughes. The report will be released at 18:00 GMT.

In currencies, the US dollar declined sharply against a basket of competitors on Thursday. The US dollar index (DXY), which tracks the performance of the greenback against a basket of six peers, fell 0.4% to 92.60. With the decline, the greenback is down 0.7% over the past two sessions.

EUR/USD

Europe's common currency is regaining momentum, with the EUR/USD surging past 1.1900 on Thursday. The pair was last seen trading in the mid-1.1900 region. EUR/USD remains well supported at the 100-day moving average above 1.1800. The psychological 1.2000 region is likely the next major resistance level.

GBP/USD

The pound sterling extended its rally on Thursday, as the cable traded above 1.3450. The pound is now on the offensive with the US dollar falling to four-week lows. The next major resistance is located at the psychological 1.3500 level. On the opposite side of the ledger, immediate support is located in the 1.3400 region.

US OIL

US crude futures advanced on Thursday after government data showed a bigger than expected drawdown in commercial inventories. The US Energy Information Administration (EIA) said crude stockpiles fell by 4.6 million barrels in the week ended 22 December. Crude stocks fell by nearly 6.5 million barrels the previous week. US oil prices spiked to new two-and-a-half year highs on Friday, climbing above $60 a barrel. Strong fundamental indicators could keep the market trekking higher into the new year.

Daily Pivots: (S1) 1.3403; (P) 1.3430; (R1) 1.3468; More.....

GBP/USD rises strongly today and the near term falling channel from 1.3549 is firmly taken out. Correction from 1.3549 should have completed at 1.3300 already. Intraday bias is now on the upside for 1.3549 first. Break will resume whole rally from 1.3038 for 1.3651 high next. on the downside, below 1.3424 minor support will delay the bullish case and bring more consolidation first.

In the bigger picture, while the medium term rebound from 1.1946 low was strong, it's limited below 1.3835 key support turned resistance. As long as 1.3835 holds, we'd view such rebound as a correction. That is, we'd expect another leg in the long term down trend through 1.1946 low. However, sustained break of 1.3835 should at least send GBP/USD to 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466.

Daily Pivots: (S1) 0.9751; (P) 0.9806; (R1) 0.9840; More....

USD/CHF falls to as low as 0.9785 so far today and intraday bias remains on the upside for 0.9734 support. Break will resume whole correction from 1.0037. Nonetheless, we'd expect strong support from 61.8% retracement of 0.9420 to 0.1.0037 at 0.9656 to contain downside and bring rebound. On the upside, above 0.9839 resistance will turn bias to the upside for retesting 0.9977 resistance.

In the bigger picture, range trading continues between 0.9420/1.0342. At this point, 0.9420 appears to be a strong support level. Therefore, in case of decline attempt, we don't expect a firm break of this level. Nonetheless, strong break of 1.0342 is also needed to confirm upside momentum. Otherwise, medium term outlook will stay neutral.

Daily Pivots: (S1) 112.59; (P) 112.93; (R1) 113.19; More...

USD/JPY's fall from 113.63 continues today but after all it's staying in range of 112.02/113.74. Intraday bias remains neutral for the moment. Also, near term outlook stays bullish as long as 112.02 support holds. Break of 113.74 will resume the rebound from 110.83 and target 114.73 key resistance. Decisive break there will carry larger bullish implications. However, break of 112.02 will likely extend the corrective pattern from 114.73 with another leg through 110.83 support.

In the bigger picture, we're holding on to the view that correction from 118.65 is completed at 107.31. And medium term rise from 98.97 (2016 low) is going to resume soon. Sustained break of 114.73 should affirm our view and send USD/JPY through 118.65. However, break of 107.31 will dampen this view and extend the medium term fall back to 98.97 low.

Daily Pivots: (S1) 0.7770; (P) 0.7789; (R1) 0.7817; More...

Intraday bias in AUD/USD remains on the upside as rebound from 0.7775 is still in progress. Further rise would be seen to 0.7896 cluster resistance (61.8% retracement of 0.8124 to 0.7500 at 0.7886). On the downside, break of 0.7694 support is needed to indicate completion of the rebound. Otherwise, further rally will remain in favor in case of retreat.

In the bigger picture, we're still slightly favoring the case that corrective rise from 0.6826 medium term bottom is likely completed at 0.8124, after hitting 55 month EMA (now at 0.8034). But stronger than expected rebound from 0.7500 is dampening this bearish view. On the downside, break of 0.7500 will target 0.7328 key cluster support (61.8% retracement 0.6826 to 0.8124 at 0.7322) to confirm this bearish case. But break of 0.8124 will extend the rise from 0.6826 to 38.2% retracement of 1.1079 (2011 high) to 0.6826 (2016 low) at 0.8451 before completion.

Daily Pivots: (S1) 1.2535; (P) 1.2598; (R1) 1.2630; More....

USD/CAD's decline accelerates again and reaches as low as 1.2547 today so far. The break of 1.2598 support now argues that whole rebound from 1.2061 has completed at 1.2919 already. Near term outlook is bearish for 61.8% retracement of 1.2061 to 1.2919 at 1.2389 or possibly below. On the upside, break of 1.2697 minor resistance is needed to indicate short term bottoming. Otherwise, near term outlook will stay mildly bearish in case of recovery.

In the bigger picture, we're still favoring the case that USD/CAD has defended 50% retracement of 0.9406 (2011 low) to 1.4689 (2016 high) at 1.2048. And with 1.2048 intact, we'd favor the case that fall from 1.4689 is a correction. With that in mind, fall from 1.2919 is viewed as a correction. Hence, we're not anticipating a break of 1.2061 low. In the long run, USD/CAD should have another medium term rise to take on 38.2% retracement of 1.4689 to 1.2061 at 1.3065.

Dollar remains generally weak as 2017 is coming to a close. It has been a rather bad year for the greenback despite Fed's rate hike. The highly anticipated tax plan of the Republicans also provided little boost to the greenback. Dollar index's yearly high was made back in January at 103.82. It then dropped to as low as 91.01 in September before finally staging a rather weak recovery. The sharp fall in December would very likely put 91 hand back into in the coming January. And we could see more downside in the greenback, at least in near term, before seeing a sustainable rebound.

Technically, we'd maintain the 91 represents an important support area for Dollar index in the long term. The fall from 103.82 is still seen as developing into a corrective move. There is 91.91 support, clustered with 38.2% retracement of 72.69 to 103.82 at 91.93. 55 month EMA is also around at 91.69. Hence, we'd still anticipate strong support around 91 to contain downside. But a sustain break there will probably give extend the decline for another 6-12 months towards 61.8% retracement at 84.58, before the correction completes.

The struggle in long treasury yield, despite Fed's hikes, was also a factor capping dollar's rebound. 10 year yield hit 2.621 back in December 2016 but then turned into corrective trading for a year. At the time of writing, there is no clear sign that such consolidation has completed. The rebound from September low at 2.034 has been weak and without conviction. The long term picture still suggest that 1.336 was the bottom on bullish convergence condition in monthly MACD. But, at least a test on 3.306 high is needed to give us some more confidence on this long term view.

The picture of stocks was very different with DOW, S&P 500 and NASDAQ in record runs in 2017. Again, that came despite Fed's tightening. And together with strong job data, the US economy was clearly in good shape. The only missing piece for Fed is that all the economic momentum is no translating into inflation yet. There were worries that flattening yield curve is pointing to recession ahead. But so far, there is no such indication as seen in stocks. DOW is still in a long term acceleration phase and could try to target 161.8% projection of 10404.09 to 18351.36 from 15450.56 at 28308.59 in 2018.

Wish all our readers happy new year! See you again on Jan 2, 2018.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.2535; (P) 1.2598; (R1) 1.2630; More....

USD/CAD's decline accelerates again and reaches as low as 1.2547 today so far. The break of 1.2598 support now argues that whole rebound from 1.2061 has completed at 1.2919 already. Near term outlook is bearish for 61.8% retracement of 1.2061 to 1.2919 at 1.2389 or possibly below. On the upside, break of 1.2697 minor resistance is needed to indicate short term bottoming. Otherwise, near term outlook will stay mildly bearish in case of recovery.

In the bigger picture, we're still favoring the case that USD/CAD has defended 50% retracement of 0.9406 (2011 low) to 1.4689 (2016 high) at 1.2048. And with 1.2048 intact, we'd favor the case that fall from 1.4689 is a correction. With that in mind, fall from 1.2919 is viewed as a correction. Hence, we're not anticipating a break of 1.2061 low. In the long run, USD/CAD should have another medium term rise to take on 38.2% retracement of 1.4689 to 1.2061 at 1.3065.

Economic Indicators Update