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The 50-, 100-, and 200-hour SMAs pressured the New Zealand Dollar lower against the US Dollar on Wednesday.

Given that the three SMAs are above the price level, most likely, the currency pair will continue to fall within this session. The Greenback could push the Kiwi towards the lower boundary of a medium-term descending channel pattern at 0.6653.

On the other hand, the currency exchange rate could reverse from the current price level and breakout through the upper boundary of the descending channel pattern today.

Bitcoin's recent forays into price territory above $4,000 have been beaten back over the holiday, putting the bulls under pressure to regain momentum. The cryptocurrency had peaked to around $4,140 on Dec. 21, then to over $4,200 on Dec. 24, but dropped sharply back to around $3,720 early yesterday. A small bullish bounce since has now subsided and, at press time, bitcoin is changing hands at $3,762, as per CoinDesk data.

FxPro analyst said that the world's largest cryptocurrency by market capitalization now looks to be consolidating under a lower low, potentially building momentum for another push above $4,000 should buy pressure persist above two key resistance levels.

Given its recent price action and a revisit to intra-day support levels seen at $3,675, bitcoin looks weakened, having fallen victim to an early holiday sell-off. In our previous article, we discussed a possible visitation to resistance (R2 on chart) at $4,400, based on the measured Fibonacci extension taken on the daily chart. Bitcoin barely peaked out at $4,236 (R1), however, before it was rejected to lows not seen since Dec. 20, resulting in the formation of the temporary support.

Currently, it would appear that bitcoin doesn't have the capacity to climb higher, as volume is falling with rising prices on the smaller time frames (1-hour chart, 30-min chart). Pressure is now mounting for the bulls to make a play above $4,200 or risk conceding the short-term up-trend they had struggled hard to win.

A short-term sell-off showed bitcoin's temporary support lay at around $3,675 with a small bullish bounce triggered from that zone. Bitcoin was rejected from around $4,200 on Dec. 24/25, signalling bullish exhaustion. A drop below $3,650 would dash short/mid-term bullish hopes heading into the new year.

The over-the-counter (OTC) market has long been considered to be bigger in size and volume than the crypto exchange market, having a bigger impact on the Bitcoin price. Large institutional investors and high profile retail traders often rely on the OTC market for orders that typically exceed $1 million to ensure the market has enough liquidity to facilitate the settlement.

On major fiat-to-crypto exchanges like Coinbase, Skew, a cryptocurrency options market data provider, said that purchasing over $4 million in Bitcoin could cost an investor a 10 percent premium.

FxPro analyst said that the inefficiency of placing large orders on cryptocurrency exchanges naturally lead investors into the OTC market, as large premiums result in substantially higher rates.

Throughout the past several months, several major cryptocurrency exchanges in the likes of Coinbase have established custodial solutions to help institutions invest in the digital asset market with high liquidity. The minimum investment threshold on Coinbase Custody is $5 million, which if bought on cryptocurrency exchanges could easily result in a 10 to 15 percent premium rate.

Based on the findings of Tabb Group, the OTC market could be processing nearly $8 billion per day and up to $12 billion. In the fourth quarter of 2018, Fidelity, the fourth largest asset manager in the world, debuted Fidelity Digital Assets to provide cryptocurrency custody targeted at institutional investors. The trend in several major markets including Japan, South Korea, and the United States is shifting from the development of infrastructure focused on individual traders to custodial solutions and strictly regulated investment vehicles, which may allow the OTC market to have even a larger impact on the price trend of Bitcoin in the long-term.

The euro has recovered back towards the 1.1400 level against the US dollar following Wednesday’s sharp decline to the 1.1342 support level. The EURUSD pair currently has an intraday neutral bias, although sellers are creating bearish lower price lows. A sustained technical breakout from the 1.1355 to 1.1430 price is needed to establish a new short-term trend.

The EURUSD pair is bearish while trading below the 1.1355 level, key technical support is found at 1.1342 and 1.1300 levels.

If the EURUSD pair trades above the 1.1410 level, buyers may test towards the 1.1430 and 1.1455 levels.

The British pound has continued to drift lower against the US dollar during the European trading session, with sellers now targeting towards the 1.2600 level. The 1.2600 support level is a major technical barrier for sellers, as a clear breach of this level exposes a possible move towards the 1.2528 level. Overall, downside pressure on the GBPUSD pair is likely to persist while price trades below the 1.2660 level.

The GBPUSD pair is strongly bearish while trading below the 1.2600 level, key support below is found at the 1.2528 and 1.2470 levels.

If the GBPUSD pair trades above the 1.2660 level, buyers may test towards the 1.2680 and 1.2700 resistance levels.

Gold jumped above the 200-day simple moving average (MA) last week for the first time since May and continued to rally until touching a six-month high of 1,279 yesterday. With the RSI breaking above the 70 overbought barrier after a long time, downside corrections are not unlikely in the short-term. The positive momentum in the MACD though, which fluctuates comfortably above its red signal line, suggests that the precious yellow metal will likely maintain its gains, at least in the short term.

On the upside, the bulls will likely retry to pierce the 1,279 top, with scope to reach a more restrictive area around 1,290. Even higher, the bottom of the five-month consolidation seen at the beginning of the year at 1,310 may provide resistance. If breached, attention would shift towards the noisy 1,326 region.

On the other hand, a leg lower may find support at the 50% Fibonacci of the long downleg from 1,365 to 1,160, at 1,260. Should this fail to hold, subsequent declines could open the door for the 38.2% Fibonacci of 1,236. Slightly lower, 1,220 could be another level to watch.

Turning to the medium-term picture, the bullish profile is expected to hold as long as the market keeps trading well above the Ichimoku cloud. Moreover, it’s worth noting that the 50-day MA continues to rise towards the slipping 200-day MA, increasing the chances for a brighter positive outlook.

Overall, gold is still bullish both in the short and the medium-term picture.

In the Monthly Bulletin released today, ECB warned that "signs of moderating momentum are emerging" in the global economy. And "activity is expected to decelerate in 2019 and remain steady thereafter." And that "reflects the projected cyclical slowdown across advanced economies and in China."

The central bank also noted that "The intensification of trade tensions between the United States and China should weigh on activity in both countries. While the global impact is still judged to be relatively limited, heightened uncertainty about future trade relations may adversely affect confidence and investment."

ECB added that "While the temporary truce between the United States and China sent a positive signal, there remains considerable uncertainty as to whether the talks will lead to a significant de-escalation of US-China trade tensions."

For Eurozone economy, ECB noted the slowdown in 2018 has been "driven largely by external factors, in particular the weakness in external demand." And, "much like the strengthening of growth in 2017, the slowdown in 2018 has been driven by net exports. Trade dynamics have been normalising as global growth has fallen back towards potential levels.

Nevertheless, ECB also said "All in all, the recent slowdown in growth has not, thus far, called into question the fundamentals of the current economic expansion."

Full ECB monthly bulletin here.

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.13890
Open: 1.13518
% chg. over the last day: -0.33
Day's range: 1.13514 – 1.13932
52 wk range: 1.1214 – 1.2557

The EUR/USD technical picture remains ambiguous. The quotes are consolidating, the EUR is testing the local support and resistance levels 1.13700 and 1.14000. The financial market participants are waiting for important stats from the US.

The Economic News Feed for 27.12.2018:

Customer Trust Index (US) - 17:00 (GMT+2:00);

New Real Estate Sales (US) - 17:00 (GMT+2:00).

The indicators do not provide precise signals, the price has crossed 50 MA and 200 MA.

The MACD histogram is located close to 0.

The Stochastic Oscillator is in the neutral zone, the %K line is below the %D line, which points toward a bearish sentiment.

Trading recommendations

Support levels: 1.13700, 1.13300, 1.13000
Resistance levels: 1.14000, 1.14350, 1.14750

If the price fixes above the round 1.14000, expect the EUR/USD quotes to grow toward 1.14350-1.14700.

Alternatively the quotes can descend toward 1.13400-1.13200.

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.26602
Open: 1.26311
% chg. over the last day: -0.32
Day's range: 1.26284 – 1.26665
52 wk range: 1.2477 – 1.4378

The GBP/USD is still being traded in a long flat. There is no single defined trend. The key support and resistance levels are 1.26300 and 1.26750. Positions should be opened from these levels. You should keep an eye on the US news feed.

The Economic News Feed for 27.12.2018 is calm.

The indicators do not provide precise signals, the price fixed between 50 MA and 200 MA.

The MACD histogram is in the negative zone but above the signal line, which gives a weak signal to sell GBP/USD.

The Stochastic Oscillator is in the neutral zone, the %K line is crossing the %D line. There are no signals yet.

Trading recommendations

Support levels: 1.26300, 1.26000, 1.25750
Resistance levels: 1.26750, 1.27000, 1.27350

If the price fixes above 1.26750, consider buying GBP/USD. The movement will tend toward 1.27000-1.27350.

Alternatively the quotes can descend toward 1.26000-1.25750.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.35782
Open: 1.35679
% chg. over the last day: -0.11
Day's range: 1.35662 – 1.36110
52 wk range: 1.2248 – 1.4132

USD/CAD is consolidating after a long rally. There is no singular trend. Luni is testing the key support and resistance levels of 1.32650 and 1.36150. A technical correction is possible soon. Keep an eye on the oil quotes dynamic and open positions from the key levels.

The Economic News Feed for 27.12.2018 is calm.

The indicators do not provide precise signals, the price is testing 50 MA.

The MACD histogram is close to 0.

The Stochastic Oscillator is near the overbought zone, the %K line is crossing the %D line. There are no signals at the moment.

Trading recommendations

Support levels: 1.35650, 1.35250, 1.34900
Resistance levels: 1.36150, 1.36500

If the price fixes above the resistance level of 1.36150, expect further growth of the USD/CAD quotes. The movement will tend toward 1.36500-1.36700.

Alternatively the quotes fix below 1.35650 and you should expect a corrective trend toward 1.35300-1.35000.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 110.230
Open: 111.301
% chg. over the last day: +0.85
Day's range: 110.809 – 111.340
52 wk range: 104.56 – 114.56

USD/JPY started to grow after a long descend. Yesterday the quotes grew by 100 points and updated the local maximums. Right now the safe haven currency is consolidating and has good prospects for growth. Positions should be opened from the key levels.

The Economic News Feed for 27.12.2018 is calm.

The indicators do not provide precise signals, the price has fixed between 50 MA and 200 MA.

The MACD histogram is in the positive zone but below the signal line, which gives a weak signal to buy USD/JPY.

The Stochastic Oscillator is in the neutral zone, the %K line is crossing the %D line. There are no signals at the moment.

Trading recommendations

Support levels: 110.750, 110.150
Resistance levels: 111.400, 111.900, 112.250

If the price fixes above the resistance level of 111.400, expect further growth of the USD/JPY quotes toward 111.900-112.250.

Alternatively the quotes can descend toward 110.250-110.100.

The USD rose yesterday making a small comeback, after the market was overshadowed by uncertainty and fear in the previous days. During the past day’s President Donald Trump publicly took shots at the FED, accusing it for the recent market plunge. The US president specifically stated the only problem the US economy has, is the FED. At the same time, the US government is undergoing a partial shutdown for the fifth consecutive day, due to a dispute of Democrats and Republicans over the budget required to build the wall on the U.S.-Mexico border. Democrats disagree with spending money on a wall, but instead suggest the use of technology, to control the border. US officials said the shutdown could carry on into January, as President Trump stated, the shutdown could persist until we have a wall. Further developments on the pre mentioned news could create volatility for the US dollar and safe havens like Gold. XAUUSD opened with a positive gap on Monday the 24th of December breaking our 1270.70 (R1) resistance level. The movement could due to the negative impact of the pre mentioned news on the USD. However, yesterday the USD was seen strengthening and the precious metals fell below the pre mentioned level, only to stabilize very near to that price. It must be noted that, Gold has reacted significantly to the previous day’s news coming from the US, and in 1 week and since the 20th of December, it has risen over 20 USD in value. If the soaring continues then we may see the shiny metal breaking the 1270.70 (R1) resistance level and aim for higher grounds, with the next level being our 1280.59 (R2) resistance level. On the contrary, if the precious metal is to correct on the downside, then we may see a movement towards our 1261.05 (S1) support level which could even be breached. If the bearish movement persists then we could see it moving even lower for the 1252.15 (S2) Support line.

BOJ could take further action to reach its goals According to BOJ Governor Kuroda, the bank will seek to hit his inflation target as soon as possible, changing his previous wording that went “at the earliest date possible.” The change of wording has provoked some attention towards the BOJ, while analysts remain curious in the next steps the bank could take. BOJ targets a 2 percent inflation rate, however Governor Kuroda said global risks have prevented such a target to be reached, adding that the trade wars require further attention. He stated that the Japanese economy is performing well and will maintain the current powerful easing while weighing the benefits and costs of our policy in a balanced manner. Further news on the matter could create volatility on JPY pairs. USD/JPY moved higher yesterday, especially in the US session, correcting for its recent plunge on Monday. USDJPY was able to climb over the 110.70 (S1) support level and moved even higher to surpass the 111.150 levels (now turned to resistance). In case the bullish momentum persists today, we could see the pair climbing even higher and breaking the 111.150 (R1) resistance level and aim even higher for the 111.650 (R2) resistance area. On the other hand, should the bears dictate the pair’s direction in today’s European and American sessions, we could see it dropping below the 110.70 (S1) support line and aim even lower for the 110.30 (S2) support level.

In today’s other economic highlights: In today’s European session, we get the ECB Economic Bulletin which could create volatility for EUR pairs. In a quiet American session, we get from the US the CB Consumer Confidence for December and the New Home Sales for November. From all of us here at IronFX we would like to wish you solid trading and best wishes for a merry Christmas and happy holidays.

XAUUSD H4

Support: 1261.05 (S1), 1252.15 (S2), 1241.02 (S3)
Resistance: 1270.70 (R1), 1280.59 (R2), 1290.41 (R3)

USDJPY H1

Support: 110.700 (S1), 110.300 (S2), 109.874 (S3)
Resistance: 111.150 (R1), 111.650 (R2), 112.150 (R3)

Notes/Observations

• Europe returns from its extended holiday with equity prices mixed in the aftermath that saw US stocks post their best day in nearly a decade; analysts debate whether price action was back from the dead or its dying gasp?
• US-China Trade talks to take place in Beijing in early Jan; note that Hong Kong Nov exports declined for 1st time in almost two years
• White House said to consider new year executive order to bar Huawei, ZTE purchases

Asia:

• US and China reportedly plan for "mid-level" trade talk’s week of Jan 7th in China, headed by US Dep Trade Rep Gerrish
• UK Defense Sec Williamson reportedly had raised concerns about the role Huawei has in 5G development
• China Nov Industrial Profits YTD y/y: +11.8% v 13.6% prior
• South Korea said to release defense white paper in early 2019 that would delete content that made North Korea Govt and Army as an enemy

Europe:

• EU Budget Commissioner Oettinger: Still a chance that UK parliament would vote for Brexit deal in January, expected UK to leave EU next year
• Business leaders’ confidence in the British economy has sunk to its lowest level in more than 18 months as the risk of a no-deal Brexit in a little over three months grows

Americas:

• President Trump reiterates stance that was prepared to wait 'whatever it took' to achieve border security, wall funding (Reminder US Govt remained on partial shutdown)
• Trump administration said to be looking to issuing an executive order in January barring US companies from buying Huawei & ZTE products

Macro

• (EU) Eurozone: The ECB's economic bulletin reported that "the incoming information remains overall consistent with an ongoing economic expansion", but also highlighted "increased downside risks" amid "uncertainties related to geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets and financial market volatility". The ECB continues to see the need for ongoing "significant monetary policy stimulus", which suggests further measures to rollback monetary accommodation is not on the agenda , if downside risks materialize the ECB will come under pressure to restart the QE program or at the very least introduce another round of TLTROs.

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -1.35% at 332.14, FTSE -0.80% at 6,632.49, DAX -1.79% at 10,443.78, CAC-40 -0.17% at 4,618.32, IBEX-35 -0.60% at 8,430.00, FTSE MIB -1.28% at 18,162.50, SMI -0.93% at 8,341.50, S&P 500 Futures -1.74%]

Market Focal Points/Key Themes:

• European Indices trade mostly lower across the board led by the DAX as it plays catch up after 3 days of closure. US Index futures trade sharply lower after over 5% gains yesterday.
• On the corporate front Plus500 trades sharply higher as the company continues to see performance ahead of expectations. On the M&A front Vinci edges higher after acquiring a majority stake in Gatwick airport, EVS Broadcast trades higher following an investment from Ackermans & van Haaren. Elsewhere 4SC trades higher on positive safety review of SENSITIZE study; Sound Energy trades sharply higher following prelim results of intermediate wireline logs at TE-10.
  Looking ahead earners include CSP.
• Energy: Sound Energy PLC [SOU.UK] +15.5% (prelim results of logs)
• Financials: Plus500 [PLUS.UK] +6.5% (trading update)
• Healthcare: 4SC AG [VSC.DE] +4% (positive review), Georgia Healthcare Group PLC [GHG.UK] -2% (acquisition)
• Industrials: Vinci [DG.FR] -0.5% (acquisition), Hochtief AG [HOT.DE] +2% (awarded contract), Construcciones y Auxiliar de Ferrocarriles SA [CAF.ES] +2.5% (awarded order)
• Technology: Bango PLC [BGO.UK] -0.5% (trading update)

Speakers

• ECB Economic Bulletin saw ongoing economic expansion but with increased risks. Significant monetary policy stimulus was still needed as it saw signs of moderating momentum that was emerging
• Italy Parliament said to vote on 2019 budget by Sat, Dec 29th
• Russia Fin Min Siluanov: 2019 borrowings seen at least at 2018 level. Did not see risks of variation from 2019 economic forecasts. To continue reducing the share of USD transactions in oil and gas sector
• China Commerce Ministry (MOFCOM) Spokesman Gao reiterated US and China trade teams maintaining 'close' communication
• China PBoC committee Q4 quarterly meetingstatement noted that it would maintain its prudent policy stance and comprehensively use multiple policy tools. To make monetary policy more forward-looking, flexible and targeted. Reiterated to keep CNY currency (Yuan) exchange rate stable at a reasonable level and keep liquidity reasonable ample

Currencies/ Fixed Income

• The session saw the USD give back some of the gains achieved during Wednesday’s trading that saw US equities rise and push bond yields higher. Robust US consumer demand during the holiday period was cited as the catalyst.
• The greenback remains locked and well contained within its recent ranges nonetheless. Dealers noted that risk aversion remained prevalent as Hong Kong Nov exports declined for 1st time in almost two years
• EUR/USD hovering around the 1.14 level while USD/JPY stayed below the 111 area.

Economic Data

• (FI) Finland Dec Consumer Confidence Index: 16.1 v 18.3 prior; Business Confidence: 2 v 6 prior
• (VN) Vietnam Q4 GDP Y/Y: 7.3% v 6.9% prior; GDP YTD Y/Y: 7.1 v 6.9% prior
• (VN) Vietnam Dec CPI Y/Y: 3.0% v 3.4%e
• (VN) Vietnam Dec Trade Balance: -$0.2B v -$0.4B prior; Exports YTD Y/Y: 13.8% v 14.3%e; Imports YTD Y/Y: 11.5% v 12.4%e
• (VN) Vietnam Dec Industrial Production Y/Y: 11.4% v 9.6% prior
• (VN) Vietnam Dec YTD Retail Sales Y/Y: 11.7% v 11.5% prior
• (CZ) Czech Dec Consumer Confidence Index: 6.8 v 4.5 prior; Business Confidence: 15.8 v 17.4 prior; Composite Index (Consumer & Business): 14.0 v 14.8 prior
• (ES) Spain Nov Adjusted Retail Sales Y/Y: 1.4% v 1.4%e; Retail Sales (unadj) Y/Y: 1.5% v 4.7% prior
• (HK) Hong Kong Nov Trade Balance (HKD): -45.0B v -40.0Be; Exports Y/Y: -0.8% v +7.7%e; Imports Y/Y: 0.5% v 7.1%e
• (CH) Swiss Dec Credit Suisse Expectations Survey: -22.2 v -42.3 prior
• (AT) Austria Dec Manufacturing PMI: 53.9 v 54.9 prior (35th month of expansion)

Fixed Income Issuance

• (IT) Italy Debt Agency (Tesoro) sold €6.5B vs. €6.5B indicated in 6-month Bills; Avg Yield: 0.215% v 0.163% prior; Bid-to-cover: 1.33x v 1.60x prior
• (IT) Italy Debt Agency (Tesoro) sold €2.0B vs. €1.5-2.0B indicated range in Zero Coupon Nov 2020 CTZ; Avg Yield: 0.699% v 0.995% prior; Bid-to-cover: 1.78x v 1.56x prior

Looking Ahead

• (PT) Portugal Year-to-Date Budget Report
• (EG) Egypt Central Bank Interest Rate Decision: No analyst estimates. Current Lending Rate at 17.75%; Current Deposit Rate at 16.75%
• 06:00 (CA) Canada Dec CFIB Business Barometer: No est v 61.2 prior
• 06:00 (CZ) Czech Republic to sell Bills
• 06:45 (US) Daily Libor Fixing
• 07:00 (ES) Spain Nov YTD Budget Balance: No est v -€8.4B prior
• 07:30 (BR) Brazil Nov Total Outstanding Loans (BRL): 3.190Te v 3.165T prior; M/M: +0.6%e v -0.2% prior; Personal Loan Default Rate: No est v 4.9% prior
• 08:00 (RU) Russia Gold and Forex Reserve w/e Dec 21st: No est v $463.6B prior
• 08:30 (US) Initial Jobless Claims: 216Ke v 214K prior; Continuing Claims: 1.67Me v 1.688M prior
• 09:00 (US) Oct FHFA House Price Index M/M: 0.2%e v 0.2% prior
• 10:00 (US) Dec Consumer Confidence: 133.7e v 135.7 prior
• 10:00 (US) Nov New Home Sales rescheduled (**Note: schedule data delayed due to partial govt shutdown)
• 10:00 (CO) Colombia Nov National Unemployment Rate: No est v 9.1% prior; Urban Unemployment Rate: 9.8%e v 10.2% prior
• 11:30 (BR) Brazil Nov Central Govt Budget Balance (BRL): -15.5Be v +9.5B prior
• 11:30 (US) Treasury to sell 4-Week and 8-Week Bills
• 13:00 (US) Treasury to sell 7-Year Notes
• 14:00 (AR) Argentina Oct Economic Activity Index (Monthly GDP) M/M: No est v -1.9% prior; Y/Y: -2.8%e v -5.8% prior
• 14:00 (AR) Argentina Q3 Current Account Balance: -$6.0Be v -$8.3B prior