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WTI maintains firm tone and posted fresh high at $58.68 on Friday, hitting the highest level since June 2015.

Oil price remains supported by further draws in crude oil inventories and growing signs of global oil market rebalancing.

Eyes turned towards next week’s OPEC meeting in Vienna, with strong expectations that the cartel will agree to extend current output agreement beyond March 2018 when it expires.

Bull-leg from $54.80 trough eyes its Fibo projections at $59.08 (138.2%) and $59.82 (161.8%) ahead of psychological $60.00 barrier.

Meanwhile, bulls could take a breather as overbought daily studies signal consolidation.

Former top at $57.90 marks solid support, with extended downticks to be contained by rising 10SMA ($56.76) to keep bulls intact.

Res: 58.68, 59.08, 59.82, 60.00
Sup: 58.34, 57.90, 57.23, 56.76

USD in the doldrums as investors grow impatient

Investors have been waiting for months for a USD rally. Expectations have kept building up as investors expected that the combination of tighter monetary policy, sustained gains in the jobs market and a tax reform would trigger a dollar rally. Unfortunately, it didn’t unfold as expected.

Despite the fact that Trump’s tax bill passed the House of Representative quite easily, it is far from a done deal, as the bill still has through the Senate next week. There is little doubt the outcome will be very close. The recent broad dollar weakness suggests that investors remain sceptical it go through easily.

In addition, the latest economic data came on the soft side. October durable goods orders (released on Wednesday) missed expectations. The headline gauge contracted 1.2%m/m compared to +0.3% median forecast. When excluding transportation, the gauge rose 0.4%m/m (0.5% expected); however, previous month’s reading was upwardly revised to 1.1%. A week earlier, October’s retail sales painted a mixed picture as the effects of the Hurricanes’ season is still distorting the data.

Finally, Fed members took their distance and have systematically avoided flooding the media with hawkish/dovish statements about the monetary policy outlook. The Fed has already started to reduce its giant balance sheet in October. However, it didn’t have much effect on the long-end of the yield curve. The central bank should also increase borrowing costs in December, which would bring the target band to 1.25%-1.50%.

On Friday, the greenback kept on grinding lower as market participants reacted to positive news from the euro zone and thin trading conditions due to Thanksgiving Holidays in the US. On the long-term, we believe that rising interest rates in the US will help to maintain buying in the dollar, especially against high commodity currencies such as the Aussie and the Kiwi. However, one should remain cautious regarding EUR/USD as the European economic conditions are finally improving. It wouldn’t be surprising to see a further euro gains in the next few months.

Euro higher on strong German IFO Business Climate

Financial markets always tend to closely monitor German’s economic data not only because the country is always acting as the locomotive of the European economy but also because the current political uncertainties currently occurring in Germany. Indeed, Merkel has been unable to build a coalition within the Bundestag and new elections may occur in January.

This morning has been released the IFO business climate data which provides details concerning indicator of economic development. The data is very strong despite markets expected a slight deceleration. The data is now standing at all-time high.

Other German data are improving. German GDP printed at 0.8% q/q for Q3. German will likely record its best economic year since 2011. We mentioned yesterday inflation in the US which is increasing. It is the same thing that is happening in Europe.

Now that markets’ expectations are way more significant concerning the Fed’s monetary policy and we believe that there are room for disappointment, we believe the Eurodollar should continue climbing higher.

The U.S dollar has started to correct against the Japanese yen, after finding interim support around the 111 level on Thursday. The USDJPY pair currently trades around the 111.44 level in a quiet Asian trading session, as Japanese markets return from Thanksgiving holidays. The Bank of Japan have reduced their JGB buying today in the bond market, however traders have not taken this as Yen bullish, as the USDJPY slowly pushes back towards its key 200-day moving average.

The USDJPY pair is likely to continue to correct while price-action holds above the 111.34 level. Further upside towards the 111.72 level remains possible.

Should price action decline below the 111.34 level, sellers may look to test the 111 level, and target the 110.66 region.

The euro currency continues to trade towards the November monthly price-high against the U.S dollar, reaching 1.1859 in early Friday trading. EURUSD price-action is currently sat at 1.1852, as depressed trading volumes from the U.S markets absence hamper the euro's upside progress, as buyers attack the 1.1862 resistance level. Today sees a lack of market moving macro-economic data from the eurozone and the U.S, although the main theme of U.S dollar weakness, still looks set drive trading sentiment.

Should EURUSD price-action break above the 1.1862 level, further upside towards the 1.1890 and 1.1910 level appears likely.

A loss of the 1.1835 level may see EURUSD price-action push-back towards the 1.1807 support level.

An upsurge of economic data will make headlines on Friday, as US traders return from Thanksgiving. However, market participants can expect a fairly quiet trading session following the US holiday.

Action begins at 08:15 GMT with a Swiss government report on industrial production. The third quarter results will be released on a quarterly and year-over-year basis.

At 09:00 GMT, the CESifo Group will release its latest business survey for Germany. The business climate indicator is expected to nudge down to 116.5 from 116.7 for the month of November. The current assessment index is forecast to tick up to 125.0. Meanwhile, the indicator covering expectations is forecast to dip to 108.9 from 109.1 the previous month.

Over the next hour, reports on Italian industrial orders and British mortgage approvals will make their way through the financial markets.

Shifting gears to North America, IHS Markit will release the latest PMI indicators covering the US economy. The preliminary manufacturing purchasing managers’ index (PMI) is forecast to show slight growth in November, reaching 54.8. The services index is forecast to climb to 55.5 from 55.3 the previous month.

In terms of monetary policy, European Central Bank (ECB) officials Vitor Constancio and Benoit Coeure will deliver speeches throughout the day. The ECB has begun the long process of policy normalization, but is leaving plenty of leg room to extend quantitative easing for longer than previously expected. Therefore, currency traders are assessing remarks from the ECB very critically.

The common currency has gained ground on the dollar in recent sessions. The US dollar index, which tracks the greenback against a basket of six peers, is currently trading at its lowest level since mid-October. The greenback is in the midst of a sharp two-week downtrend, with investors doubting the Federal Reserve’s plan to normalize monetary policy.

EUR/USD

The euro has received a large boost over the past two days, and now finds itself trading at more than one-month highs versus the greenback. The EUR/USD exchange rate was last seen trading at 1.1852 with strong upward bias. The pair continues to trade above the key 1.1790 level. Prices will remain in an uptrend so long as this critical zone is maintained.

GBP/USD

Cable printed fresh highs earlier this week as the dollar lost ground on global counterparts. The GBP/USD had lost some of its momentum on Friday, declining 0.1% to 1.3290. The pair faces immediate resistance at Wednesday’s daily high of 1.3312. Support is located around 1.3213.

USD/JPY

The dollar gained some ground on the Japanese yen Friday, but remained in a firm downtrend. USD/JPY was last seen trading at 111.45. The pair continues to see renewed buying interest around 111.20, which should keep the bears at bay.

The cross remains constructive and briefly extended recovery on Friday but gains faced strong headwind from base of thick daily cloud (0.8920) which so far capped the upleg from 0.8841 trough.

Cloud base is reinforced by daily Tenkan-sen (0.8927) and marks significant barrier which could encourage fresh shorts on reversal signal below the cloud base.

Bearish scenario requires acceleration below daily Kijun-sen (0.8877) to confirm reversal and expose 0.8841(21 Nov higher low) for retest.

This would also complete H&S pattern on daily chart and signal further weakness.

Alternatively, firm break of cloud base would generate bullish signal for recovery extension towards next pivotal barrier at 0.8954 (100SMA).

Res: 0.8920, 0.8954, 0.9013, 0.9026
Sup: 0.8920, 0.8877, 0.8841, 0.8811

Early Friday's action remains in red as recovery leg from 0.7530 shows initial signs of stall.

Falling trendline off 0.8102 (20 Sep high) marks strong barrier (reinforced by 20SMA) and continues to cap corrective attempts.

Overbought slow stochastic on daily chart adds to growing downside risk.

Today's close in red will be bearish signal with close below 10SMA at 0.7596 (also Fibo 38.2% of 0.7530/0.7638 recovery leg) needed to confirm and turn near-term bias lower.

Conversely, firm break above bear-trendline (currently at 0.7628) would generate bullish signal for extension of recovery leg towards 0.7665 (Fibo 38.2% of 0.7883/0.7530 bear-leg) and 0.7707 (daily Kijun-sen) in extension.

Res: 0.7628, 0.7665, 0.7707, 0.7729
Sup: 0.7596, 0.7579, 0.7555, 0.7530

Reversal signal is forming on daily chart after yesterday's trading ended in tight Doji.

Fresh recovery attempts today were so far limited and lacking momentum for stronger upside which requires break above 100/200SMA's (111.64/70) which are diverging and generating bearish signal.

Immediate risk will remain at the downside while the latter barriers cap, with fresh weakness through Fibo 50% support at 111.02 expected to open daily cloud base (110.44) for test.

Conversely, bullish scenario needs close above cloud top (112.01) to confirm reversal.

Res: 111.70, 112.01, 112.48, 112.90
Sup: 111.55, 111.02, 110.44, 110.15

Crude oil came sharply down last week which now looks like a deep completed fourth wave pullback, after a nice turn up from 55 support area. Notice that oil made an overlap with 56.60 which is important for a bullish case as it invalidated any bearish interpretations. As such, we think market is back on the rise, headed above 58 and possibly 59 region this week for wave 5 of 3).

Crude oil, 4H

CHF/JPY is trading in a two-month descending channel. This downward-sloping movement prevailed for most of this time until last week when the Swiss Franc failed to test its bottom boundary circa 112.50. Nevertheless, the pair likewise failed to edge higher and thus entered a week-long consolidation period in the 113.16/56 area. This balance between bulls and bears continues to prevail the market and might do so during this session, as well. However, a breakout is likely to occur during the following trading sessions and, in case the rate fails to move below the psychological 113.00 mark, the bullish sentiment should eventually take the upper hand and lead the pair towards a breakout of the senior channel circa 114.25.