Sample Category Title

EUR/USD

Current level - 1.1866

The forecast is for another test of the support level at 1.1808 down to 1.1740. In positive direction the next resistance level will be at 1.1932 and after that at 1.1962.

USD/JPY

Current level - 112.602

The outlook is still positive for breakthrough of the resistance level at 113.1340. That will lead to increase of the price of the currency pair and test at 113.9050. In negative direction the resistance level is at 111.7380.

GBP/USD

Current level - 1.3465

The outlook is negative for test of the support level at 1.3370. Successful breakthrough of this level will lead to another test at 1.3219. In positive direction if we have a successful breakthrough of the resistance level at 1.3550, we might expect increase up to 1.3623.  

Cable stands at the back foot in early Tuesday's trading and pressuring Monday's low at 1.3412, n bearish acceleration from Asian high at 1.3481.

Yesterday's strong upside rejection near key 1.3549 barrier and subsequent pullback was negative signal, with near-term sentiment turning into negative mode following disappointing news from Brexit talks on Monday.

The pair is likely to extend correction after repeated rejections at 1.3549 tops and challenge pivotal support provided by rising 10SMA (currently at 1.3391).

Corrective dips are seen as an opportunity to re-join broader uptrend. Ascending 10SMA is initial entry point, but deeper pullback towards strong support at 1.3354 (Fibo 38.2% of 1.3038/1.3549 ascend) cannot be ruled out.

Sustained break below 1.3354 would soften near-term structure, while loss of daily Kijun-sen (1.3294) will be bearish signal.

Res: 1.3481, 1.3500, 1.3549, 1.3595
Sup: 1.3391, 1.3354, 1.3294, 1.3233

Sunrise Market Commentary

• Rates: Front end US yield curve rises further
  The main item on today's agenda is the US non-manufacturing ISM which is expected to remain very strong. In theory, that's negative for US treasuries, but we don't expect a strong reaction. The front end of the US yield curve continues to underperform, discounting already two rate hikes for 2018 going into next week's FOMC meeting.
• Currencies: Dollar rebound stalls despite rising interest rate support
  The dollar profited temporary from the tax bill approval in the US Senate yesterday, but the rally stalled as US equities turned south. Today's eco data probably won't cause a big directional USD move. Even so, the ongoing rise in ST US yields is making USD shots expensive and should protect the USD downside going into the payrolls and next week's Fed meeting

The Sunrise Headlines

• US stock markets ended varied with Nasdaq (-1%) underperforming as a last-minute change to Senate Republicans' tax-overhaul plan may mean higher taxes for corporations, including IT firms. Asian bourses trade mixed overnight.
• A carefully choreographed divorce deal between London and Brussels was derailed at the eleventh hour after Northern Ireland's hardline Unionists rejected Theresa May's agreement to potentially keep the province aligned with EU law after Brexit. EUR/GBP rose back above 0.88.
• Growth in China's services sector activity picked up to a three-month high in November (PMI: 51.9), buoyed by a solid rise in new business, though the rate of expansion remained moderate and weaker than the long-run trend.
• The Reserve Bank of Australia kept its policy rate unchanged at 1.5%, but a shift in the inflation language signalled that the central bank is arguably offering a less dovish tone. AUD/USD rises from 0.76 to 0.7650.
• The Reserve Bank of New Zealand's new assumption that global inflation will stay lower for longer means it is more exposed to the risk of prices picking up, Acting Governor Spencer said. NZD/USD moves higher towards 0.69.
• European Finance Ministers shifted power from the north of the continent to the south, providing a boost to opponents of austerity policies. They chose Portugal's FM Centeno to lead the Eurogroup to succeed Dijsselbloem.
• Today's eco calendar contains November services PMI's in EMU (final), the UK and the US (ISM). EMU retail sales are also up for release

Currencies: Dollar Rebound Stalls Despite Rising Interest Rate Support

Dollar rebound stalls despite higher ST yields

European (and US) markets initially reacted in a positive way to the approval of the US tax bill. European equities jumped higher. ST US yields rose further and the dollar extended cautious gains. USD/JPY tested the 113 area. The gain of the dollar against the euro was again more limited. Later in US dealings, tax optimism dwindled, reversing most of the intraday ‘reflation trade'. The dollar returned a big part of the early gains. USD/JPY closed the session at 112.41 (from 112.17 on Friday). EUR/USD finished the day at 1.1866 (from 1.1896). Asian equity indices show a mixed picture. A new setback in US tech stocks also affects (parts of) the Asian markets. The dollar ‘bottoms' after the late session setback in the US yesterday evening. USD/JPY trades in the 112.60 area. EUR/USD is changing hands near 1.1870 area. The RBA as expected left its policy rate unchanged at 1.50%, but expects that a stronger labour market could see some lift in wage growth over time. Better than expected retail data also supported the Aussie dollar. AUD/USD trades in the mid 0.76 area. The kiwi dollar made some modest gains after RBNZ's Spencer indicated that the bank could give more weight to output employment and financial stability.

The eco calendar contains the final EMU (services) PMI's, EMU retail sales and the US non-manufacturing ISM. EMU PMI's are expected to confirm the strong growth momentum (57.5 for the composite PMI). Retail sales are expected to have declined in October (-0.7% M/M and 1.6% Y/Y). We don't expect the EMU data to have a lasting impact on the euro. The US non-manufacturing ISM is expected to ease slightly from 60.1 to 59, still a very high level. Last week's manufacturing ISM showed a similar pattern. We have no reason to take a different view from the consensus. Of late, markets mostly reacted rather muted to (US) activity data. Investors are more sensitive to price data.

The dollar showed a mixed picture last week, rebounding against the yen but holding relatively soft against the euro. Yesterday, the pattern initially continued, but the USD rebound was aborted by a new up-tick in US equity volatility later in the session yesterday. The US 2-yr yield continues an astonishing rise (currently above 1.80%!), but it was only of little help for the dollar of late. Even so, it should at least help to put a floor for the US currency as USD shorts are becoming ever more expensive. We don't expect a really big directional move ahead of next week's Fed policy decision/statement.

That said, except for high profile negative news from the US (or negative risk sentiment) we see no reason for EUR/USD to rise beyond the 1.1961/1.20 area. The downside of USD/JPY looks better protected, but the rebound might slow if it isn't supported by developments on other markets.

From a technical point of view: EUR/USD set a post-ECB low mid-November, but dollar momentum wasn't strong enough. EUR/USD regained the 1.1880 MT correction top, opening the way for a full retracement to the 1.2092 top. A return below 1.1713 would signal that the rebound in EUR/USD is aborted. For now, there is no clear technical signal. The USD/JPY momentum deteriorated early November. USD/JPY dropped below the 111.65 neckline, but there was no aggressive follow-through selling. Last week the pair even succeeded a nice rebound, calling off the downside alert. The pair again hovers in the 110.84/114.73 consolidation range. We amend our ST bias on the pair from negative to neutral.

EUR/USD: rally aborted, but no clear trend yet

EUR/GBP

Sterling hit by last-minute Brexit failure

Brexit headlines caused a rollercoaster ride for sterling yesterday. UK PM May met with EU Commission president Juncker. EUR/GBP initially hovered in the 0.8825 area. Around noon there were press headlines from several sources that EU's Barnier had indicated that negotiations on the separation issues were headed for a breakthrough. Sterling jumped higher across the board as markets assumed that Brexit negotiations could move to the content of the new relationship between the UK and the EU post Brexit. However, at a joined press conference, UK PM May and EC's Juncker said that progress had been made, but no final agreement was reached. Sterling reversed most of the intraday gains. EUR/GBP finished the session at 0.8803. GBP closed the session at 1.3480.

Overnight, BRC UK retail sales rebounded to 0.6% Y/Y. However, it doesn't help sterling. The UK currency remains under pressure. Markets are disappointed on yesterday's last minute failure to reach a separation deal. Both parties are still trying to reach a deal to be proposed to the EU summit next week. Yesterday's failure is the perfect illustration of the difficult balancing act that PM May faces and will continue to face during the next stages of the negotiations. Today, the UK services PMI will be published. A slight decline from 55.6 to 55 is expected. The report probably will only be of intraday significance for sterling trading. The focus remains on Brexit. Sterling remains in the defensive, unless there is hard evidence of a deal.

MT view/technical picture: A BoE driven sterling rebound ran into resistance early last month. Sterling declined again as markets anticipated that the rate cycle would be very gradual and limited. EUR/GBP trades in a 0.8733/0.9033 consolidation range. Brexit headlines cause day-to-day gyrations. We changed our ST bias on EUR/GBP from positive to neutral mid-November. The 0.9015/33 area might be tough to break short-term. In case of more positive news on Brexit, return action to the 0.8733 (or below) level is possible ST.

EUR/GBP: downside test rejected as Irish border deal fails last minute

Download entire Sunrise Market Commentary

EUR/USD - 1.1857

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.1865

Kijun-Sen level                  : 1.1854

Ichimoku cloud top             : 1.1881

Ichimoku cloud bottom      : 1.1875

Original strategy  :

Sell at 1.1915, Target: 1.1815, Stop: 1.1950

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.1915, Target: 1.1815, Stop: 1.1950

Position : -

Target :  -

Stop : -

As the single currency recovered after holding above support at 1.1809, retaining our view that further consolidation below resistance at 1.1961 (last week’s high) would be seen and mild downside bias remains for weakness towards support at 1.1808-09 (61.8% Fibonacci retracement of 1.1713-1.1961 and previous support), however, break there is needed to retain bearishness and extend weakness to 1.1770 and possibly to support at 1.1736 but price should stay above previous key support at 1.1713.

In view of this, we are looking to sell euro on recovery as 1.1910-20 should limit upside and bring another decline. Above said Friday’s high at 1.1940 would revive bullishness, bring retest of 1.1961, break there would confirm early upmove has resumed for headway to 1.1990-00 which is likely to hold from here.

XAUUSD (1275.40): Gold prices continue to remain flat with price action showing strong consolidation near the 1274 level of support. Failure to establish a clear trend suggests that the sideways price action might continue. Below the 1274 support, gold prices could be at risk of posting a decline towards the 1262 support level. To the upside, the 1285 resistance is likely to maintain the gains in the near term. On an intraday basis, gold prices could be seen posting a modest rally to fill Friday's gap at 1280.46 but further gains beyond this could be limited.

USDJPY (112.49): The U.S. dollar rose to a one-month high yesterday but price closed bearish towards the end of day. Failure to maintain the gains saw USDJPY reversing gains below the 113.00 handle. We expect the near term declines to push USDJPY back towards the 112.04 level of support. The unfilled gap from Friday's close also resides close to this level which validates this view. Alternately, if the bullish momentum resumes, we could expect USDJPY to test the 113.00 resistance level on a convincing close above 112.65 level of minor support and resistance.

EURUSD (1.1873): The EURUSD closed almost flat yesterday after gapping down on Monday's open. The currency pair however remains supported to the upside in the short term. The decline to the 1.1843 support is consistent with this view. There is scope for the euro currency to retrace the declines and probably rise towards Friday's close at 1.1898 to fill the gap. Price action remains supported above 1.1843 in the near term. Resistance at 1.1920 is likely to keep a lid on any further gains. A breakout from this range is expected which could set the near term bias in the currency pair.

USD/JPY - 112.65

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 112.54

Kijun-Sen level                  : 112.73

Ichimoku cloud top             : 112.48

Ichimoku cloud bottom      : 112.19

Original strategy  :

Buy at 112.30, Target: 113.30, Stop: 111.95

Position :  -

Target :  -

Stop : -

New strategy  :

Buy at 112.10, Target: 113.30, Stop: 111.75

Position :  -

Target :  -

Stop : -

As the greenback has retreated after rising to 113.09 yesterday, suggesting consolidation below this level would be seen and pullback to 112.10-20 cannot be ruled out, however, reckon downside would be limited to 111.80-85 and bring another rise later, above said resistance at 113.09 would extend recent rise to resistance at 113.33 but loss of upward momentum should prevent sharp move beyond 113.60-70.

In view of this, we are still looking to buy dollar on pullback as 112.00-10 should limit downside and bring another rise. Below 111.80 would defer and risk weakness to 111.60 but only break of said support at 111.37-41 would abort and signal top is formed instead. 

The British pound was seen trading volatile as the currency pair gave up the gains intraday. This came after news reports emerged that the UK and the EU talks turned inconclusive. The British PM May was in Brussels yesterday to meet with Juncker and discuss the Brexit bill and the Irish border.

In the U.S. the passage of the tax reforms bills boosted the Greenback. Investors expect that the tax cuts will help the U.S. economy while also increase the pace of rate hikes. The news helped stall a three day decline in the U.S. dollar.

On the economic front, the U.S. factory orders showed a 0.1% decline on the month. This was slightly better than the 0.3% decline that was forecast. Previous month's revised data showed an increase of 1.7%. In the UK, the construction PMI was better as data showed an increase to 53.1 beating forecasts of 51.2 and up from 50.8 previously.

Looking ahead, the economic data today will see the UK's services PMI and the non-manufacturing PMI from ISM. Earlier in the day, the RBA's monetary policy meeting showed interest rates staying unchanged at 1.50%.

The U.S dollar is starting to recover upside momentum against the Japanese yen, after falling towards the 112.40 support level during the Asian session. The USDJPY pair currently trades around the 112.60 level, after giving way to strong technical selling earlier on, as the U.S dollar index slipped back from Monday's price-high. The macroeconomic calendar will remain empty for Japan on Tuesday, however later today we see a raft of Manufacturing related data coming from the United States economy.

Should price action on the USDJPY pair hold below the 112.70 technical level, intraday sellers may look to test the 112.40 level again, with extended support found at 111.58.

If USDJPY buyers push price-action above the 112.70 technical level again, a continuation of the recent up-move towards 113.10 and 113.89 may occur.