Sample Category Title

EUR/USD

Current level - 1.1341

A possible second test around the 1.1360 zone and if the price breaks up, we can once again see levels above 1.14. If the test to surpass 1.1360 fails, we can expect continuation of the downtrend movement seen on the higher time frames, with first support at 1.1300.

USD/JPY

Current level - 113.59

A slow upward price movement after the test of the support 113.20, suggests for a consolidation in the short term. However, if the price breaks up the key support/resistance levels of 112.30 and 114.00 respectively, we can expect a new trend formation for the longer term.

GBP/USD

Current level - 1.2781

The political tensions around the Brexit deal weigh on the pound. We can see a another test and a possible break down of 1.2730 level. This will clear the way to continue the down move to 1.2200  To witness an alternative scenario the pair must break the key resistance at 1.2860 and afterwards 1.3300.

XAUUSD (1225.14): Gold prices gave up the gains logged from the previous day on Friday. However, price action posted a reversal just above the last support level of 1213.50. If price closes above 1223.50, the reversal would be confirmed. Gold prices will then most likely attempt to test the upper resistance level at 1242.25. Failure to clear the temporary resistance/support area of 1223.50 could, however, increase the risk of the downside. The lower support at 1204.00 will be the support level of interest.

GBPUSD (1.2771): The British pound continues to consolidate around the support area of 1.2747 region. However, price action is starting to squeeze out from the falling trend line which also forms a descending triangle pattern. A break down below this support level could indicate further declines in the GBPUSD. To the upside, a clear break of the falling trend line to the upside is needed for the GBPUSD to post any gains. The upside target of 1.3086 remains the prime target.

EURUSD (1.1351): The EURUSD currency pair was bearish on Friday as price action was seen giving up the gains made from the previous days. The euro fell back to the support area of 1.1315 - 1.1300 level. With price back at the familiar support level, the common currency could be seen attempting to post another reversal off this level. With the resistance level at 1.1435 not being tested recently, we could expect this to be the upside target. If the EURUSD slips below the support level, then the common currency can extend declines down to 1.1220 level.

The U.S. Dollar managed to erase some of the losses from Thursday. Price action managed to post a reversal sending most of the currencies to close weaker or subdued by Friday.

Data from the Eurozone showed that import prices in Germany rose 1.0% on the month. This beat estimates of a 0.4% increase and showed an acceleration from 0.4% previously.

Retail sales were, however, lower, falling 0.3% missing estimates of a 0.4% increase. The flash inflation estimates for the Eurozone registered a dip as inflation rose just 2.0% in November against estimates of a 2.1% increase. Core inflation was also weaker at 1.0%.

The NY trading session showed that Canada's GDP contracted 0.1% in September on a monthly basis. This brought the third quarter GDP to rise just 2.0% in the three months ending September.

The G20 summit concluded over the weekend. The big news out of the event was that the United States and China agreed to a 90-day truce. This comes as both nations agreed to work out the trade differences. This meant that the planned hike on tariffs on over $200 billion worth of goods from China which is due to take effect from Jan 1 would now be postponed.

Meanwhile, China agreed to increase its purchase of U.S. goods including agriculture, energy and industrial products to reduce the trade deficit.

Looking ahead, the first trading day for December will see the Manufacturing PMI reports from the Eurozone. The final Eurozone manufacturing PMI is forecast to remain steady at 51.5, marking an unchanged print from the month before.

In the U.S. the ISM's manufacturing PMI is expected to ease to 57.5 from 57.7 in October. Construction spending data is forecast to rise 0.4% on the month.

• Rates: Risk rebound and higher oil prices weigh on core bonds
  Core bonds sell off this morning as US President Trump and Chinese President Xi reached a 90-day trade truce to settle differences. Oil prices surge ahead of Thursday’s OPEC meeting. The risk rebound, higher oil prices and strong expected US eco data (manufacturing ISM) are expected to weigh further on core bonds today. Fed speakers are wildcards.
• Currencies: risk-rebound might support EUR/USD, at least temporary
  This morning, the dollar returns part of Friday’s gain, as the safe haven bid is easing in the wake constructive China-US trade developments. The positive context should also be EUR/USD supportive. However, it will be interesting to see whether any EUR/USD rebound will have stronger legs than last week’s post-Powell rebound.

The Sunrise Headlines

• US stock markets closed Friday’s session with solid gains (+0.75%). Asian bourses opened firmly in green this morning, as investors welcome the ceasefire between China and the US. Chinese indices outperform.
• US president Trump and Chinese president Xi Jinping agreed to a temporary ceasefire, as Trump suspended his decision to raise the tariff rate on $200bn of Chinese imports starting from 2019. Both parties will now continue negotiations.
• Spanish PM Sanchez’s Socialist party suffered a setback in the regional election in Andalusia, as it only won 33 seats compared to 45 at the 2015 elections. The anti-immigrant and far right Vox party won seats (12) for the first time.
• Oil prices jumped 5% higher over the weekend as Russia and Saudi Arabia agreed to extend their deal into 2019 to manage the oil market (OPEC+) and Canada’s largest oil producing province (Alberta) ordered large output cuts.
• China’s Caixin Manufacturing PMI printed 50.2 in November, the highest reading since August. The index is up from 50.1 last month and beating consensus expectations of 50.1.
• French president Emmanuel Macron held an emergency meeting with his ministers yesterday as the president faces a political crisis due to protests/riots against the high energy prices in Paris and other French cities.
• Today’s economic calendar contains the November US manufacturing ISM and UK manufacturing PMI. Numerous Fed heavyweights speak today, including Fed Vice Chairman Clarida.

Currencies: Risk-Rebound Might Support EUR/USD, At Least Temporary

Risk trade to support EUR/USD, at least temporary

The USD traded with an upward bias on Friday. The post-Powell correction had run its course. Investors were reluctant to take risky assets on board ahead of the Trump-Xi meeting on Saturday, providing a modest safe haven bid for the dollar. A strong Chicago PMI was also USD-supportive. On the euro side of the story, a contraction in the Q3 Italian GDP and a soft EMU core inflation were tentative euro negatives. EUR/USD closed the session at 1.1317 (from 1.1393). A modest USD/JPY intraday gain evaporated later. The pair closed at 113.57 (from 113.48). On Saturday, US president Trump and Chinese president Xi Jinping agreed to halt the race to higher tariffs and to intensify talks to solve the trade dispute. The improved US – China sentiment triggered a risk rally in Asia this morning. At the same time, oil rebounds on growing signs that Saudi-Arabia and Russia might agree on action to stop the recent oil price decline. The trade-weighted dollar is easing below the 97 mark. The likes of the Aussie dollar (AUD/USD 0.7360) outperform. The yuan also profits (USD/CNY below 6.91). The gain in EUR/USD (1.1360 area) is more modest. USD/JPY (113.50) also doesn’t profit from the risk on trade. Today, the final Nov EMU PMI’s and the US manufacturing ISM will be published. Several Fed Members will also give their view going into the December policy meeting. Last but not least, we are keen to see the degree of conviction in the post G20 equity rebound. In theory, a risk rebound in combination with rising oil prices should be USD negative. At the same time, US yields might rise, too. A potential negative risk factor/obstacle for the US economy and for the Fed normalisation process is easing. We start the week with a cautious positive bias for EUR/USD. However, last week’s post-Powell reaction in mind, we are not convinced that the move will have strong legs. For now, we assume the 1.15/1.1621 range top wil remain a tough nut to crack short-term.

In technical trade, EUR/GBP initially hovered in the 0.89 area on Friday. Some sterling shortcovering going into the weekend caused the pair to close at 0.8874. This week, the political noise in the run-up to next week’s Brexit vote will continue to dominate sterling trading. Today, the UK government might come under pressure to publish the legal advice supporting the Brexit bill. One can expect LT investors to stay sidelined as long as the binary Brexit risk persists. We maintain a cautious approach on sterling.

EUR/USD: Risk-on sentiment to open the way for a test higher?

Daily Pivots: (S1) 1.1283; (P) 1.1343; (R1) 1.1380; More.....

Intraday bias in EUR/USD remains neutral at this point. As long as 1.1472 resistance holds, deeper decline is expected in the pair. On the downside, break of 1.1267 will target 1.1215 low first. Firm break there will resume larger down trend from 1.2555 for 1.1186 fibonacci level next. However, considering bullish convergence condition in daily MACD, firm break of 1.1472 will be suggest medium term bottoming and turn outlook bullish for 1.1814 resistance instead.

In the bigger picture, as long as 1.1814 resistance holds, down trend down trend from 1.2555 medium term top is still in progress and should target 61.8% retracement of 1.0339 (2017 low) to 1.2555 at 1.1186 next. Sustained break there will pave the way to retest 1.0339. However, break of 1.1814 will confirm completion of such down trend and turn medium term outlook bullish.

Daily Pivots: (S1) 1.2721; (P) 1.2766; (R1) 1.2796; More...

Intraday bias in GBP/USD remains neutral for the moment. On the upside, break of 1.2927 will bring stronger rebound to 1.3071 resistance first. On the downside, break of 1.2725 will likely send GBP/USD lower to retest 1.2661 low. After all, price actions from 1.2661 are viewed as a consolidation pattern. Even in case of strong rebound, upside should be limited by 1.3316 fibonacci level to bring down trend resumption eventually.

In the bigger picture, whole medium term rebound from 1.1946 (2016 low) should have completed at 1.4376 already, after rejection from 55 month EMA. The structure and momentum of the fall from 1.4376 argues that it's resuming long term down trend. And this will be the preferred case as long as 38.2% retracement of 1.4376 to 1.2661 at 1.3316 holds. However, firm break of 1.3316 would bring stronger rebound to 61.8% retracement at 1.3721. And, the eventual depth of the fall from 1.4376, and the chance of hitting 1.1946 low, will depend on the strength of the interim corrective rebound from 1.2661.

Daily Pivots: (S1) 0.9958; (P) 0.9982; (R1) 1.0012; More...

Intraday bias in USD/CHF remains neutral at this point. On the downside, break of 38.2% retracement of 0.9541 to 1.0128 at 0.9904 will resume the fall from 1.0128 to 0.9848 key support level. Break there will indicate near term reversal and target 61.8% at 0.9765. On the upside, break of 1.0006 will argue that the pull back from 1.0128 has completed. Intraday bias will be turned back to the upside for retesting 1.1028.

In the bigger picture, rise from 0.9541 could have topped at 1.0128. But as long as 0.9541 support holds, we'd still expect rise from 0.9186 to resume at a later stage. Break of 1.0128 will target 1.0342 key resistance. However, break of 0.9514 will pave the way back to 0.9186 low.

Daily Pivots: (S1) 113.31; (P) 113.51; (R1) 113.69; More..

USD/JPY is bounded in range of 113.18/114.03 and intraday bias remains neutral. On the downside, below 113.18 will target 112.30 support first. Break there will target 111.37 and possibly below. On the upside, above 114.03 will target a test on 114.54/73 key resistance zone. Overall, price actions from 114.54 are seen as a consolidation pattern. Hence, even in case of deep decline, downside should be contained by 38.2% retracement of 104.62 to 114.54 at 110.75 to bring rebound.

In the bigger picture, corrective fall from 118.65 (2016 high) should have completed with three waves down to 104.62. Decisive break of 114.73 resistance will likely resume whole rally from 98.97 (2016 low) to 100% projection of 98.97 to 118.65 from 104.62 at 124.30, which is reasonably close to 125.85 (2015 high). This will stay as the preferred case as long as 109.76 support holds. However, decisive break of 109.76 will dampen this bullish view and turns outlook mixed again.