Weekly Technical Analysis For December 17th to 22nd, 2017
EUR/USD: The Federal Reserve hikes interest rates by 25 basis points last week, as expected. The Fed raises target interest rate to 1.25 - 1.50 percent and they projected three more hikes in both 2018 and 2019 before a long-run level of 2.8 percent is reached. That is unchanged from the last round of forecasts in September. However, the greenback felt right after FOMC despite the seemingly hawkish outcome.
Last week’s another significant event was the ECB Monetary Policy Decision. The European Central Bank left rates unchanged, while ECB president Draghi gave a dovish view and easing monetary policy tightening expectations.
In the upcoming week, the Eurozone CPI Inflation will be announced. The CPI inflation is expected to be 0.1% in November which will carry y/y inflation to 1.5% as the same as a month ago. A lower than expected reading should be taken as negative for the Euro.
In the US, the final estimate for GDP growth in third quarter of 2017 to be released Thursday. It is expected to be 3.3%, as the same as the previous number. Also, November’s PCE inflation data will be another important release of this week. the Fed's preferred metric for inflation and it is expected to rise to 1.5% from 1.4% in year-on-year. A stronger than expected outcome would support dollar index and lead to further rise in US bond yields.
The EURUSD pair showed some fluctuations last week. The final decisions from the FOMC and ECB for 2017 are behind us now. The currency closed last week above the 1.1720 key support level. If the price breaks down and stays below 1.1720, on a four-hourly basis, the US Dollar may gain more value against the single currency. At this point, next support levels can be found at 1.1660 and 1.1607. Otherwise, if the price shows an upward movement from 1.1720, we will face 1.1769 and 1.1812 again, as resistance levels.
Support: 1.1720 – 1.1660 – 1.1607
Resistance: 1.1769 – 1.1812 – 1.1884
GBP/USD: Last week, The BOE kept interest rates unchanged as expected; votes 9-0. In the upcoming week, the most important release for the UK will be Q3 GDP. No change from previously announced 0.4% q/q is expected by the market and it stands for 1.5%, as the same as the previous reading. A negative surprise would weigh on GBP/USD pair.
The GBPUSD pair found sellers from the 1.3433 key resistance level last Friday and dropped sharply to the 1.3305 key support level. If the price breaks down and stays below 1.3305, on a four-hourly basis, the bearish action may gain more momentum. At this point, the next daily support level will stand at 1.3241. Otherwise, if the price rises above 1.3305, we will face 1.3370 again as a resistance level.
Support: 1.3305 - 1.3241 – 1.3199
Resistance: 1.3370 – 1.3432 - 1.3485
USD/JPY: Next week brings the final BoJ rate decision for 2017. It has been a quiet year for the BoJ. The market does not expect a change in the policy decision. We will watch the BoJ Governor Kuroda’s speech at a press conference. He would remind markets of the BoJ's resolve to maintain its ultra-easy policy until inflation is sustainably above 2%.
The USD/JPY pair found sellers from the 113.63 key resistance level at the beginning of last week and closed the week above 112.46. As long as the price stays above 112.46, as on four hourly bases, the currency may move up and we will face resistance level at 112.94 and 113.63. On the other hand, If the price drops below 112.46, next support levels will be at 112.08 and 111.66.
Support: 112.46 – 112.08 – 111.66
Resistance : 112.94 – 113.63 – 114.11
GOLD: The Gold price found buyers from the 1243 daily support level and then rose to the 1256 key resistance level. In order for the rise to continue, it needs to remain above 1256, on a four-hourly basis. In this case, the next resistance level will be at 1265. Otherwise, we might see some pullback and we will follow again support level at 1249 and 1243.
Support: 1249 – 1243 - 1235
Resistance : 1256 – 1265 - 1272