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The US Dollar regained its lost positions against the Canadian Dollar on Monday. The currency pair appreciated about 121 base points during the close of Monday's trading session.

The exchange rate was consolidating below a strong resistance level formed by the monthly pivot point at 1.3419 during the first part of Tuesday's trading session.

Technical indicators suggest that the bullish sentiment is likely to continue within this session.

The potential target for bullish traders will be at the upper boundary of an ascending channel pattern at 1.3462.

The New Zealand Dollar appreciated about 61 base points against the US Dollar on Monday. The appreciation was stopped by a strong resistance level formed by the 100-hour simple moving average and the weekly pivot points at 0.6892.

A resistance cluster formed by the combination of the 100-hour SMA and the weekly pivot point at 0.6892 pressurised the currency pair south during the first half of today's session.

Everything being equal, it is likely that the moving averages pressurise the currency exchange rate south towards a swing low of 0.6840 during the following trading session.

US futures are slightly in the red ahead of the open on Tuesday, despite a broadly positive session being seen across Asia and Europe.

As we head into the middle of the month, the much talked about – and very much sought after – Santa rally is looking increasingly unlikely, with risk appetite becoming more depressed by the day and the outlook for the global economy looking more challenging. We're now seeing daily commentary it seems about the progress of talks between the US and China but the reality is that this is going to be a process that moves at a glacial pace but the fact that talks are happening are a reason to be optimistic.

May returning to Brussels cap in hand

On the day that the UK was meant to be voting on Theresa May's Brexit deal, the PM is instead off to Brussels in a last ditch attempt to save her deal – and job – and draw one final concession from the EU on the backstop agreement. Officials have thus far been adamant that the current deal is the best and only option on the table but May will be hoping that the block won't engage in a game of chicken with the UK parliament that unintentionally leaves us with no deal.

The inclusion of a unilateral withdrawal from the backstop under certain conditions seems the only way of saving May's deal at this late stage. If she fails to come back from Brussels with it, that could set in motion a series of events that creates huge uncertainty at the most illiquid time of year in the markets which makes for a potentially chaotic few weeks, with a leadership challenge, no confidence vote in the government and second referendum calls all on the table. Perhaps this will be viewed in Brussels as a risk worth taking, with a potentially plunging pound piling further pressure on the UK government.

Oil vulnerable, Gold bullish ahead of Fed meeting

The boost from the OPEC+ output cut did last long for oil prices, with Brent and WTI both trading back near their pre-meeting lows. Whether this is a case of the agreement under-delivering compared to market expectations, doubts about its ability to put a dent in the oversupply or the group's ability to deliver, prices are once again looking vulnerable and a break below $58 in Brent and $50 in WTI could be the catalyst for another wave of selling.

Gold is ticking higher again, having held above $1,240 at the first time of asking on Monday as the dollar benefited from the Brexit shambles and weighed on the yellow metal. I remain quite bullish on Gold a week before a Fed meeting in which a rate hike is no longer the guarantee it looked a couple of weeks ago and the central bank is expected to adopt a less hawkish tone than it has for some time. The only thing that stands in its way, it seems, is a collapse in negotiations between the US and China and/or the UK and Europe.

The Euro bounces from lows at 1.1350 (Mon/today) posted after upside rejection at strong 1.1440 resistance zone (daily cloud base/Fibo 38.2% of 1.1815/1.1215 descend/falling 55SMA). Tuesday's action ended in bearish daily candle with long upper shadow which signaled bulls were trapped and generated negative signal. Fresh recovery attempts are underpinned by rising momentum and Monday's failure to clearly break below a cluster of daily MA's at 1.1360 zone, as the single currency remains so far resilient on fresh turbulence over Brexit. Scope for renewed attack at 1.1440 zone pivots exists, however, bulls may show hesitation here again as thickening daily cloud weighs. The pair needs clear break above these barriers (55SMA/cloud base/Fibo resistance) to generate stronger bullish signal, but this looks unlikely for now. Extended congestion between 200WMA (1.1312) and Fibo 38.2% barrier (1.1444) is seen as more likely scenario, with negative sentiment on France and Italy, expected to keep the downside vulnerable. Sustained break below 200WMA, which so far resisted several attacks, would bring bears fully in play and risk test of pivotal support at 1.1186 (Fibo 61.8% of 1.0340/1.2555 ascend).

Res: 1.1400, 1.1420, 1.1444, 1.1507
Sup: 1.1350, 1.1312, 1.1305, 1.1267

European Commission President Jean-Claude Juncker will meet UK Prime Minister Theresa May later today, with the latter seeking for changes in the Brexit agreement so as to pass UK parliament. Juncker said ahead of the meeting that, "The deal we achieved is the best possible. It's the only deal possible. There is no room whatsoever for renegotiation."

Nevertheless, he added "there is room enough to give further clarifications and further interpretations without opening the withdrawal agreement". But he reiterated that "the withdrawal agreement will not be reopened."

Regarding the backstop, Juncker somewhat echoed what May has said before. That is, "We have a common determination to do everything to be not in a situation one day to use that backstop but we have to prepare. It's necessary for the entire coherence of what we have agreed. It's necessary for Britain and it's necessary for Ireland. Ireland will never be left alone."

Stocks closed higher Monday as major indexes bounced back from earlier losses as renewed confidence in the strength of the U.S. economy offset lingering worries over the U.S.-China trade dispute. The Dow Jones Industrial Average DJIA, +0.14% rose 34.31 points, or 0.1%, to end at 24,423.26, while the S&P 500 SPX, +0.18% gained 4.64 points, or 0.2%, to 2,637.72. The Nasdaq Composite Index COMP, +0.74% advanced 51.27 points, or 0.7%, to close at 7,020.52.

At session lows, the Dow had lost more than 500 points, while the S&P had shed 50 points and the Nasdaq had been down 81 points. The S&P 500 closed 1.9% above its intraday low, its biggest such bounce since Feb. 6; the Dow closed 2.1% above its session low for its biggest intraday, upside reversal since April 4, according to Dow Jones Market Data. Concerns over global growth as well as trade woes overshadowed the market in early going after latest data showing a sharp slowdown in Chinese export growth reinforced fears that the best of the current bull market is behind us. However, the belief that the U.S. economy, at least, could continue to grow at a healthy pace into next year and beyond neutralized some of the worst jitters, in part due to comments from influential banks such as J.P. Morgan and Goldman Sachs that fears about U.S. economic growth are overblown.

Their views are supported by several indicators, including the ISM survey which shows resilient demand. The Labor Department also said U.S. job openings rose to 7.08 million in October, from 6.96 million a month earlier. But trade worries have also been getting in the way of traditional end-of-year gains. China’s Vice Foreign Minister Le Yucheng summoned the U.S. ambassador on Sunday to insist the U.S. withdraw its arrest warrant on Huawei’s chief financial officer Meng Wanzhou, who was detained on Dec. 1 in Canada.

Executives from both China and the U.S. are becoming increasingly wary of traveling after Huawei’s chief financial officer was arrested this month in Canada. The Dec. 1 arrest of Meng Wanzhou, chief financial officer of Huawei Technologies Co., has Chinese business people worried they could be next while Americans are growing concerned about retaliation. Meng has been detained at the request of the U.S. on charges of bank fraud related to violations of American sanctions on Iran, and a bail hearing is ongoing.

U.S. trade officials have sought to prevent the Huawei spat from escalating, insisting that it’s a law-and-order matter and trade talks are proceeding separately. Top Chinese and American trade officials spoke by phone on Tuesday morning Beijing time, leading to some optimism that the Huawei case would be kept apart from a trade war that has seen tariffs levied on hundreds of billions of dollars worth of goods.

There is reason to be concerned. The People’s Daily, the official voice of the ruling Communist Party, warned on Dec. 9 that Canada would face a “much heavier price” if it didn’t immediately release Meng. Then, over the weekend, the foreign ministry warned of more actions after it summoned both the U.S. and Canadian ambassadors.

Besides any investigations into Iranian sanctions, Chinese executives must also be concerned about a renewed U.S. effort to clamp down on economic espionage. The Justice Department last month announced an initiative to bring more charges against Chinese entities that engage in stealing trade secrets.

German ZEW economic sentiment improved to -17.5 in December, up from -24.1, better than expectation of 025.0. However, current situation index dropped to 45.3, down from 58.2, missed expectation of 55.6. Eurozone ZEW economic sentiment improved slightly to -21.0, up from -22.0, and beat expectation of -23.2. Eurozone current situation dropped -6.1 to 12.1.

ZEW President Achim Wambach noted in the release that the rise in expectation "should not be over-interpreted". He added that "the assessment of the economic situation has worsened dramatically for both Germany and the Eurozone" And, this is "indicative of relatively weak economic growth in the fourth quarter". Also, uncertainties remain in terms of the "looming international trade dispute and Brexit, which have a particularly negative impact on private investment and Germany's exports".

Full release here.

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.13907
Open: 1.13552
% chg. over the last day: -0.39
Day's range: 1.13504 – 1.13772
52 wk range: 1.1214 – 1.2557

Yesterday the EUR/USD had a bearish mood. The EUR updated the local minimums. The EUR/USD quotes are consolidating. The local support and resistance levels are 1.13500 and 1.13750. Positions should be opened from these levels. Investors expect reports from Germany and the USA.

The Economic News Feed for 11.12.2018:

Economic Mood index ZEW (GER) – 12:00 (GMT+2:00);

Manufacturer Price Index (US) – 15:30 (GMT+2:00).

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

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

The Stochastic Oscillator is in the neutral zone but above the signal line, which indicates a bearish mood.

Trading recommendations

Support levels: 1.13500, 1.13200, 1.13000
Resistance levels: 1.13750, 1.14000, 1.14400

If the price fixes below the support 1.13500, expect further descend towards 1.13200-1.13000.

Alternatively, the quotes can recover toward 1.14000-1.14200.

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.27022
Open: 1.25557
% chg. over the last day: -1.25
Day's range: 1.25446 – 1.25907
52 wk range: 1.2510 – 1.4378

Yesterday the GBP/USD saw an aggressive sell-off. The quotes fell by 150 pips and updated the annual minimums. The Brexit conundrum remains in the spotlight. Theresa May announced the cancellation of the vote in the House of Commons regarding the UK leaving the European Union. An additional pressure on the GBP is cause by the array of weak economic reports regarding GDP and manufacturing industry. The quotes are being traded around 1.25600-1.26000. Positions should be opened from these levels.

At 11:30 (GMT+2:00) the UK will publish the Labour Market report.

Indicators show the power of the sellers. The price is below 50 MA and 200 MA.

The MACD histogram is in the negative zone but above the signal line, which indicates a weak bearish sentiment.

Stochastic Oscillator is in the neutral zone, the %K line started to cross %D line. There are no signals at the moment.

Trading recommendations

Support levels: 1.25600, 1.25100
Resistance levels: 1.26000, 1.26400, 1.26700

If the price fixes below 1.25600, the GBP/USD quotes are expected to fall. The movement is tending to 1.25200-1.25000.

An alternative could be a growth in the GBP/USD currency pair to 1.26400-1.26700.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.33328
Open: 1.33986
% chg. over the last day: +0.52
Day's range: 1.33914 – 1.34215
52 wk range: 1.2248 – 1.3445

USD/CAD started to grow again. Yesterday CAD weakened against the USD by 75 pips. The quotes are testing 1.34200-1.34450 with the local support being 1.33800. The pressure on CAD is caused by the negative dynamic of the oil quotes. The trading instrument has prospects for growth. You should open positions from the key levels.

The News Feed for Canada is calm.

The indicators point toward the power of the buyers: the price has fixed above the 50 MA and 200 MA.

The MACD histogram is in the positive zone and keeps rising which points towards the growth of the USD/CAD quotes.

The Stochastic Oscillator is in the neutral zone, the %K line is above the %D line, which points towards the growth of the USD/CAD quotes.

Trading recommendations

Support levels: 1.33800, 1.33300, 1.32900
Resistance levels: 1.34200, 1.34450

If the price fixes below the local resistance of 1.34200, further growth of the USD/CAD quotes is expected. The movement is tending to 1.34500-1.34750.

Alternative option. If the price fixes above 1.33800, we recommend looking for market entry points to open short positions. The movement is tending to 1.33500-1.33300.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 112.613
Open: 113.317
% chg. over the last day: +0.60
Day's range: 113.007 – 113.325
52 wk range: 104.56 – 114.56

USD/JPY started to grow. During yesterday`s trades, the yen is weakened against the USA by more than 70 pips. The USD/JPY quotes are consolidating. The local support and resistance are 112.900 and 113.200. We expect important reports from the US. You should also keep an eye on the US Government bonds yield.

Indicators do not provide precise data, the price has crossed the 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 above the %D line, which points towards a bullish mood.

Trading recommendations

Support levels: 112.900, 112.600, 112.250
Resistance levels: 113.200, 113.600

If the price fixes above the support level of 113.200,, it is necessary to consider buying USD/JPY. The movement is tending to 113.500-113.700.

An alternative could be the descend of the USD/JPY quotes to 112.600-112.400.

The British pound has moved back above the 1.2600 level against the US dollar during the European trading session, following dip-buying demand and solid UK Wage data. Buyers need to move price above neckline resistance, at 1.2657, to negate the heavily bearish sentiment surrounding the GBPUSD pair. Sterling traders now await further news from British PM Theresa May’s meeting European leaders, scheduled for later today.

The GBPUSD pair is strongly bearish while trading below the 1.2657 level, key technical support is found at the 1.2550 and 1.2500 levels.

If the GBPUSD pair trades above the 1.2657 level, key intraday resistance is found at the 1.2675 and 1.2700 levels.