Sample Category Title

Cable ticked higher after overnight's dips were contained by thick hourly cloud (1.3303/1.3275) which offers immediate support and keeps the downside protected.

Near-term bias remains with bulls for retest of Friday's spike high at 1.3359 and extension towards next target at 1.3415 (Fibo 61.8% of 1.3655/1.3026 descend.

Friday's bullish outside day supports the notion, however, the pair may stay in extended consolidation before bulls resume, as slow stochastic on daily chart is reversing from overbought territory. Also, daily cloud is twisting next week and may attract.

Strong supports at 1.3276/60 zone (daily cloud top/55SMA) should keep the downside protected.

Res: 1.3359, 1.3415, 1.3455, 1.3506
Sup: 1.3303, 1.3276, 1.3260, 1.3249

The Euro is maintaining firm tone and consolidating under fresh two-month high at 1.1944 on Monday.

Last Friday's rally that closed well above pivotal barriers at 1.1877/86 (daily cloud top / Fibo 61.8% barrier) was strong bullish signal for further advance towards psychological 1.2000 resistance.

The notion was supported by the third consecutive strong bullish weekly close.

Risk of recent political crisis in Germany was offset by strong German business confidence data that neutralized downside risk.

Friday's bullish acceleration approached our initial target at 1.1965 (Fibo 76.4% of 1.2092/1.1553 downleg), with extended consolidation below here not ruled out on strongly overbought slow stochastic on daily chart and RSI turning sideways just under overbought zone boundary.

Broken daily cloud top (1.1877) is seen ideally containing and guarding 1.1830 zone (daily cloud base / rising Tenkan-sen) which is expected to limit extended dips and keep bullish structure intact for final push towards 1.2000 target.

Res: 1.1944, 1.1965, 1.2000, 1.2033
Sup: 1.1911, 1.1886, 1.1877, 1.1830

USD/CHF - 0.9785

Most recent candlesticks pattern : N/A

Trend                                    : Near term down

Tenkan-Sen level                  : 0.9795

Kijun-Sen level                    : 0.9800

Ichimoku cloud top                 : 0.9852

Ichimoku cloud bottom              : 0.9816

Original strategy :

Sell at 0.9865, Target: 0.9765, Stop: 0.9900

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 0.9835, Target: 0.9735, Stop: 0.9870

Position : -

Target :  -

Stop : -

As dollar has remained under pressure after last week’s selloff, adding credence to our bearish view that top has been formed at 1.1038 and bearishness remains for the decline from there to extend weakness to 0.9730-37 support area, however, near term oversold condition should limit downside and reckon support at 0.9705 would hold from here, bring rebound later.

In view of this, we are looking to sell dollar again on recovery as previous support at 0.9846 should turn into resistance and limit upside. Only break of 0.9875-80 would defer and signal a temporary low is formed instead, bring test of 0.9899 but price should falter well below resistance at 0.9947.

EURUSD is outperforming after a strong rally on Friday that took the pair to a 2-month high of 1.1943. Bullish technical indicators provide room for further upside. The 50 and 200-day moving averages are positively aligned and the RSI is supporting upside momentum.

The market is expected to push higher towards the 1.2091 peak – a level not seen since the end of 2014. Breaking above this top could propel EURUSD higher but in the medium term the market has been trapped in the broad 1.16-1.20 range.

EURUSD is expected to be supported on dips, with the first support at 1.1790. This is the 23.6% Fibonacci retracement level of the uptrend from 1.0820 to 1.2091. Staying above the 50-day MA (1.1753) will help keep the bullish undertone strong. Below this, there is a support zone between 1.1553 (November 7 low) and 1.1606 (38.2% Fibonacci). Any further extension lower would move EURUSD out of its medium-term consolidation phase to target 1.1455 and the key 1.1300 area before turning bearish.

In the near-term, EURUSD is entering a neutral phase around the 1.19-handle as the market appears to be overextended (RSI has reached overbought levels on the 4-hour chart). In the bigger picture, the market is strongly bullish as long as it stays clearly above 1.1900.

Key Highlights

• The Euro made a nice upside move this past week and settled above the 1.1850 resistance.
• There is a major bullish trend line forming with support at 1.1840 on the 4-hours chart of EUR/USD.
• The US Manufacturing PMI in Nov 2017 (Preliminary) declined from 54.6 to 53.8.
• The US New Home Sales report for Oct 2017 will be released today, which is forecasted to post a decline of -6.3%.

EURUSD Technical Analysis

The Euro traded higher this past week and broke the 1.1820 and 1.1850 resistance levels against the US Dollar. The EUR/USD pair is now well above 1.1850 and remains well supported on the downside.

The pair recently traded as high as 1.1946 and is currently correcting lower. An initial support on the downside is around the 23.6% Fib retracement level of the last wave from the 1.1712 low to 1.1946 high.

There is also a major bullish trend line forming with support at 1.1840 on the 4-hours chart. The trend line support is near the 50% Fib retracement level of the last wave from the 1.1712 low to 1.1946 high.

Therefore, the 1.1850 and 1.1840 support levels are very important if the pair corrects lower from the current levels. On the upside, a break above 1.1946 would call for a test of the 1.2000 handle in the near term.

US Manufacturing PMI

Recently in the US, the Manufacturing Purchasing Managers Index (PMI) for Nov 2017 (Preliminary) was released by the Markit Economics. The market was looking for a rise in the PMI from 54.6 to 54.8.

However, the actual result was on the lower side, as there was a decline in the PMI from 54.6 to 53.8, but it was way above the neutral level.

The report added:

November data pointed to another solid increase in U.S. private sector output, supported by sustained growth in both manufacturing and services activity. At 54.6, the seasonally adjusted IHS Markit Flash U.S. Composite PMI Output Index was above the 50.0 no-change threshold, but eased from 55.2 in October.

Overall, the EUR/USD pair remains well supported around 1.1850, and dips toward 1.1850 and 1.1840 will most likely face buyers in the near term.

The political instability in Germany improved over the weekend, as the leader of Bavaria’s conservative party endorsed an alliance with Germany’s Social Democratic Party (SPD). With voter pressure and the need to avoid new elections, the SPD has agreed to talk with Chancellor Angela Merkel, which raises the prospect of a new 'Grand Coalition' German Government. Many European leaders have underlined the importance of getting a stable German government in place quickly so that the Eurozone can discuss its future, including Brexit and proposals by French President Emmanuel Macron on Eurozone reforms. Chancellor Merkel stated over the weekend that she would pursue a grand coalition and an Enid poll showed on Sunday that 52% of Germans backed a grand coalition. Support for Merkel’s Christian Democratic Union was up 2 points at 33% from a week ago and the SPD was up 1 point at 22%. The markets have reacted favorably to the news pushing EURUSD to 2-month highs in early Monday trading.

Crude oil prices were mixed in early Monday trading, as the market has turned cautious ahead of a highly-anticipated Organization of Petroleum Exporting Countries (OPEC) meeting on Thursday to see whether major producers plan to extend their current production-cut agreement. The Markets expect OPEC to extend output cuts for a further 9 months until the end 2018, in a bid to reduce global oil inventories and support oil prices.

On Friday, Standard & Poors Global Ratings downgraded South Africa’s local debt to 'junk' status, which saw the Rand slide against its peers. S&P also reduced the rating on South Africa’s international debt by one place, to BB, moving it deeper into non-investment grade territory, often known as junk. The more important move was cutting the country’s local currency credit rating from BBB to BB+, meaning that is now also considered speculative. The downgrade will put pressure on international investors, who require investment-grade ratings. USDZAR traded from a low of around 13.8050 up to 14.1560 following the downgrade, before settling around 14.09 in early Monday trading.

EURUSD is little changed from Friday, currently trading around 1.1925.

USDJPY is 0.15% lower in early session trading at around 111.36.

GBPUSD is unchanged from Friday’s close, currently trading around 1.3320.

Gold is 0.16% higher, to currently trade around $1,290.50.

WTI is 0.4% lower in early Monday trading at around $58.70.

Major data releases for today:

At 09:00 GMT, The European Central Bank (ECB) will publish the EU Financial Stability Review. The European Central Bank has published the Financial Stability Review, which provides an overview of the possible sources of risk and vulnerability to financial stability in the eurozone, twice a year since 2004.

At 15:00 GMT, the US Census Bureau will release New Home Sales and New Home Sales Change (MoM) for October. New Home Sales are forecast to come in at 0.625M, a slight reduction on the previous release of 0.667M. Any significant deviation from forecast will see USD volatility.

At 15:30, the Federal Reserve Bank of Dallas will release the Dallas Fed Manufacturing Business Index for November. This is a general barometer of Texan output, employment, orders, prices and other indicators, and whether they have increased, decreased or remained unchanged over the previous month. As the largest state, the markets will look at this indicator as a gauge on the larger US economy.

GBP/USD - 1.3336

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.3325

Kijun-Sen level                    : 1.3329

Ichimoku cloud top              : 1.3300

Ichimoku cloud bottom        : 1.3275

Original strategy :

Buy at 1.3255, Target: 1.3355, Stop: 1.3220

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.3280, Target: 1.3380, Stop: 1.3245

Position : -

Target :  -

Stop : -

As cable has maintained a firm undertone after breaking above previous resistance at 1.3338, adding credence to our view that the erratic rise from 1.3027 low is still in progress and bullishness remains for this move to extend gain to 1.3375-80 (61.8% Fibonacci retracement of 1.3596-1.3027), however, reckon upside would be limited to 1.3400 and 1.3425-30 would hold from here due to loss of near term upward momentum. 

In view of this, we are looking to buy sterling on pullback as 1.3270-80 should limit downside. Below 1.3250 would defer and risk correction to 1.3230 but only break of support at 1.3209-13 would abort and signal a temporary top is formed instead, bring further weakness towards support at 1.3170. 

EUR/USD - 1.1945

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.1930

Kijun-Sen level                  : 1.1896

Ichimoku cloud top             : 1.1845

Ichimoku cloud bottom      : 1.1798

Original strategy  :

Buy at 1.1780, Target: 1.1880, Stop: 1.1745

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.1870, Target: 1.1990, Stop: 1.1835

Position : -

Target :  -

Stop : -

As the single currency has surged again after last week’s rally above resistance at 1.1861, adding credence to our bullish view that recent upmove has resumed and upside bias remains for the rise from 1.1554 low to extend gain to 1.1950-60, then 1.1980, however, reckon psychological level at 1.2000 would limit upside, risk from there has increased for a retreat to take place later.

In view of this, we are looking to buy euro on pullback as said previous resistance at 1.1861 should turn into support and contain downside, bring such rise. Below minor support at 1.1837 would defer and suggest a temporary top is possibly formed, bring correction of recent rise to 1.1800-05 first.

Sunrise Market Commentary

• Rates: Slightly negative intraday bias
  Today's eco calendar is extremely thin. The start of the US supply operation is negative for US Treasuries while progress in German coalition talks could positively impact risk sentiment and weigh on the Bund. We expect trading to be technically insignificant and occur in tight ranges though given this week's back-loaded eco calendar.
• Currencies: EUR/USD clears 1.1880 resistance area
  On Friday, EUR/USD cleared the 1.1880 resistance, reinforcing the ST upside momentum. Today, the eco calendar is thin. A cautious sentiment on risk recently weighted more on the dollar than on the euro. US eco data later this week will have to be strong to improve fortunes for the dollar short term.

The Sunrise Headlines

• US stock markets ended last week on a positive note, recording gains of around 0.25% in thin “Black Friday” dealings. Asian risk sentiment is negative overnight with China and Korea (Samsung) underperforming.
• Irish PM Varadkar is close to a deal with opposition leader Martin to avoid an election, the Sunday Times reported, ahead of Tuesday's no-confidence vote against his deputy.
• Leaders of German Chancellor Merkel's conservative party agreed to pursue a "grand coalition" with the Social Democrats (SPD) to break the political deadlock in Europe's biggest economy.
• China's industrial firms weathered a broad government crackdown on financial risks as profits continued to surge last month in a stabilising force for the world's 2nd biggest economy, which has started to cool slightly in recent months.
• Bank of Japan board member Suzuki says it's possible for the central bank to make slight changes in its yield-curve control program when price growth approaches the 2% inflation target,
• S&P cut South Africa's debt debt score to junk (BB+), while Moody's also threatened to slash its ranking to the same level, raising the risk of a selloff from global indexes. USD/ZAR rose back above 14.
• Today's eco calendar is thin with only US new home sales. The US Treasury starts its end-of-month refinancing operation with a $26bn 2-yr Note and a $34 bn 5-yr Note auction.

Currencies: EUR/USD Clears 1.1880 Resistance Area

EUR/USD holds north of 1.19

On Friday, the trend of euro resilience and USD softness continued. The euro was supported by a strong Ifo business confidence. Even so, USD weakness prevailed. A positive risk sentiment and neutral set-up in the interest rate markets were not enough to stop the bleeding for the US currency. EUR/USD regained the 1.1880 resistance and closed the session at 1.1933 (from 1.1881). USD/JPY performed better. The pair closed the session with a marginal gain at 111.53 (from 111.22).

Overnight, sentiment on Asian markets gradually tuned negative. China and south Korea are taking the lead in the correction. Japanese equities reversed an opening gain into a small losses. The correction looks primarily profit taking after recent rally. USD/JPY more or less copied the intraday price action on Japanese equity markets. An initial up-tick was reversed. USD/JPY trades again in the 111.45 area. EUR/USD trades near Friday's closing level (1.1925 area).

Today, US New Home sales are expected to have fallen 6.3% M/M, following a steep 19% gain in the previous month.. Later this week, the EMU inflation is expected to have increased to 1.6% Y/Y for the headline and 1% Y/Y for the core inflation. The US eco calendar is busy with ISM (Friday), October spending & income (Thursday) and consumer confidence (Tuesday). The Fed Beige Book, Yellen's testimony before the JEC (both on Wednesday) and Fed chair nominee Powell's confirmation hearing (tomorrow) will get much attention too.

Today, sentiment on risk and technical considerations will be the key drivers for USD trading. It is unsure whether the cautious sentiment in Asia will spill-over into European or US markets. Even so, a less buoyant risk sentiment recently seldom supported the dollar. Markets will also look forward to this week's US eco data and events. US data will probably have to surprise on the upside to change fortunes for the dollar. This is a possibility, but no certainty. The confirmation hearing of Fed's Powell is a wild card. German coalition talks might be a slightly positive for the euro.

Last week, the dollar came under additional pressure as markets questioned the Fed's rate hake intentions beyond December. These doubts finally propelled EUR/USD beyond the 1.1880 resistance. We still see a good chance that the Fed will realize its 2018 intentions, but there is no trigger to change sentiment on the dollar now. Last week we advocated stop-loss protection in case of a break of EUR/USD beyond 1.1880. As this has happened, there is no reason yet to row against the USD negative tide ST

From a technical point of view, EUR/USD set a post-ECB low mid-November, but regained since intermediate resistance at 1.1690/1.1837. On Friday, the pair also regained the 1.1880 MT correction top. This break opens the way for a full retracement to the 1.2092 top. The USD/JPY momentum was positive in October, but deteriorated this month. Last week, USD/JPY dropped below the 111.65 neckline. There was no aggressive follow-through selling, but if the break is confirmed, it would make the picture outright USD negative.

EUR/USD regains the 1.1880

EUR/GBP

EUR/GBP extends ST rebound

Sterling was captured in technical, order-driven trading Friday. EUR/GBP rebounded further north of the 0.89 big figure supported by the rise of EUR/USD. Cable profited from an overall weak dollar. Bank of England member Silvana Tenreyro repeated that two more interest-rate increases will probably be needed to get inflation back to target, but Brexit can change the BoE policy response. UK PM May met several EU leaders in Brussels, but there was no indication that a breakthrough in the negotiations is imminent. EUR/GBP finished the week at 0.89 trades near 0.8947. Cable closed hat 1.3337.

There are no eco data in the UK today. BoE's Haldane speaks in Birmingham, but we don't expect him to bring much news on monetary policy. Talks between the UK and the EU are in the last straight line to deliver a text that might convince the EU leaders to move to a next step in the Brexit negotiation. It looks that the issue of the Irish border might be a hard nut to crack. Whether or not the EU summit will be able to give the green light for further negotiations remains a binary risk. So, we don't expect GBP investors to place big directional bets until there is clarity on this issues. The day-to-day momentum remains slightly EUR/GBP positive.

MT view/technical picture. A BoE driven sterling rebound ran into resistance early this month. Sterling declined again as markets anticipated that the rate cycle would be very gradual and limited. Brexit headlines cause day-to-day gyrations. EUR/GBP trades in a 0.8733/0.9033 consolidation range. We changed our ST bias on EUR/GBP from positive to neutral two weeks ago. The 0.9015/33 area might be tough to break short-term

EUR/GBP: moving higher in the established consolidation pattern

Download entire Sunrise Market Commentary

USD/JPY - 111.30

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 111.44

Kijun-Sen level                  : 111.45

Ichimoku cloud top             : 111.69

Ichimoku cloud bottom      : 111.36

Original strategy  :

Sell at 111.85, Target: 110.85, Stop: 112.20

Position :  -

Target :  -

Stop : -

New strategy  :

Sell at 111.85, Target: 110.85, Stop: 112.20

Position :  -

Target :  -

Stop : -

As the greenback has remained under pressure after last week’s selloff, bearishness remains for the selloff from 114.74 top to extend further weakness to 111.00-03 (50% Fibonacci retracement of 107.32-114.74) but near term oversold condition should limit downside to 110.70 and reckon 110.40-50 would hold from here.

In view of this, we are looking to sell dollar on recovery as 111.88 (previous support now resistance) should limit upside and bring another decline later. Above 112.05-10 (61.8% Fibonacci retracement of 112.72-111.07) would defer and signal a temporary low is formed, bring a stronger rebound to 112.40-50 but price should falter below resistance at 112.72, bring another decline later.