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Daily Market Analysis By Option Banque

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The EUR/USD pair fell down to 1.1396 before recovering towards the 1.1500 level by the end of the day, as Wall Street reversed its intraday gains and closed the day 200 points down after having posted gains of nearly 450 points earlier in the day.

In short term, the pair seems to have found a short term bottom, as in the 1 hour chart, the technical indicators are recovering partially from near oversold levels, whilst the 100 SMA has advanced well above the 200 SMA, both below the current level, with the shortest offering a strong support around 1.1345.

eur
In the 4 hours chart the price is recovering after a brief decline below its 20 SMA, whilst the technical indicators have erased their overbought readings, and now aim slightly higher, well above their mid-lines. Nevertheless, to confirm a stronger recovery, the pair needs to advance beyond 1.1500, the 61.8% retracement of Monday’s fall.
Meanwhile positive data came from Germany, with the final GDP figures for the second quarter of this year matched expectations and the previous review, increasing by 0.4% in the three months ending June and compared to the first quarter of the year, leaving the annual growth rate at 1.6%.
Additionally, the country released its IFO survey, which resulted above expectations in all of its readings. Expectations rose to 102.2 against expectations of 102.00, whilst the Business Climate surged to 108.3 vs. 107.7 expected.
Mid European morning, China’s central bank cut its benchmark lending rate for the fifth time in nine months and also lowered it RRR, quite an unusual movement, in another desperate attempt to control stocks, and prevent the economy from shrinking further.
US data resulted mixes, with sales of new homes up 5.4% in July, to 507,000 missing expectations of 520,000, whilst the Markit Services PMI resulted at 55.2 in August against the 56.0 expected, although Consumer confidence rebounded in August, printing 101.5 up from 91.0 in July.

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Option_Banque's picture

The British Pound plummeted to a fresh 2-week low against the greenback, as fears of a delay in a possible rate hike extended to the UK.

The GBP/USD lost over 200 pips daily basis, having been under pressure ever since the European opening, and with no clear catalyst behind the early decline, later supported by dollar’s demand.

The pair trades back around the base of these last 2-month range, which increases the potential of a mid-bearish continuation after the failed upward breakout, earlier this week.

option
In short term, the 1 hour chart shows that the technical indicators are starting to look exhausted towards the downside in extreme oversold levels, but remain far from suggesting an upward correction ahead, whilst the 20 SMA heads sharply lower well above the current price.

In the 4 hours chart, the Momentum indicator heads sharply lower , despite being in oversold territory, whilst the RSI indicator heads lower around 27.

Due to the sharp decline and the fact that the price is at a critical support level, the pair may see some consolidation, or even a shallow bounce, before setting another directional move, yet as long as the price remains below 1.5520, the risk remains towards the downside.

Option_Banque
Option_Banque's picture

oil
Oil futures jumped by more than 10% on Thursday, with the U.S. benchmark adding to already large gains following a report that Venezuela asked the Organization of the Petroleum Exporting Countries to hold an emergency meeting.
West Texas Intermediate crude for delivery in October jumped $3.96, or 10.3%, to settle at $42.56 a barrel on the New York Mercantile Exchange. That was the largest single-session percentage gain for a most-active contract since March 2009. Prices had settled on Monday below $39 for the first time since February 2009.
October Brent crude LCOV5, +0.21% on London’s ICE Futures exchange climbed $4.42, or 10.3%, to $47.56 a barrel for the biggest percentage gain since December 2008.

Option_Banque
vinayak1000's picture

Trading Tuesday December 29

Oil prices rebounded in subdued trading ahead of the New Year on Tuesday, one day after declining more than 3%.
U.S. crude futures rose 13 cents, or 0.37%, at $36.95 a barrel at 6:10AM ET, after plunging $1.29, or 3.39%, on Monday. Brent futures jumped 17 cents, or 0.46%, to $36.79. A day earlier, the global benchmark tumbled $1.27, or 3.35%.
Meanwhile, the WTI crude contract kept its slim premium over Brent. U.S. crude has been firmer relative to Brent as of late, when seeing that the U.S. oil market will possibly grow tighter. In the meanwhile, a worldwide glut will worsen in 2016.

vinayak1000