Weekly Technical Analysis For December 11th to 15th, 2017
EUR/USD: US Nonfarm payrolls rose by 228K in November, following a 244K a month earlier that was revised down from the initial increase of 261K. The data exceeded the consensus estimate for the creation of 200K jobs. The unemployment rate held at 4.1% last month, in line with expectations. Average hourly earnings increased by 0.2% in November, below forecasts for a gain of 0.3% and following to the prior month 0.1% slip. Wage inflation rose less than expected, according to official data released on last Friday.
Next week brings US CPI Inflation and the Fed Meeting with what is widely expected to be the bank third hike this year.
The US CPI is expected to come out 0.4% m/m and y/y inflation is expected to rise to 2.2% in November from 2.0% a previous number. On the other hand, Core inflation is expected to be 1.8%. Acceleration in headline inflation may push US Dollar Indexand bond yields higher.
The Federal Reserve will conclude their last meeting for 2017 with the announcement of their interest rate decision. The FOMC meeting that is almost certain to generate a rate hike decision will shape the market. The target of 1.25 – 1.50%; which has been so expected. Also, It will be significant in the press conference, what the Fed says about their plans for 2018. If the Federal Reserve projects a more aggressive 2018 interest rate hike outlook, the US dollar would rise sharply.
The European Central Bank will also hold the final meetings of the year. There is no rate change is expected from the ECB this Thursday, however, Governor Draghi’s statements about the ECB view for 2018 will be closely followed by the market.
The US Dollar gained value versus the Euro for last two weeks. 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 bearish action may gain more momentum. At this point, the next support level can be found at 1.1660. Otherwise, if the price shows an upward movement, we will face 1.1769 and 1.1812 as resistance levels.
Support: 1.1720 – 1.1660 – 1.1607
Resistance: 1.1769 – 1.1812 – 1.1884
GBP/USD: UK and EU reached a deal on last Friday that allows the second phase of Brexit negotiations, on future trade relations, to proceed.
In the upcoming week, Bank of England will announce its monetary policy decision on Thursday. The market does not expect to raise rates again until towards the end of 2018 when it will add another 25 basis points. However, a surprising revision would lead to a volatility in GBP/USD. UK CPI Inflation also will be published this week. The market might show us some fluctuation in GBP/USD pair after inflation report and rate decision.
The GBP/USD found sellers from the major resistance level of 1.3485 and dropped to the 1.3370 daily support level last Friday. However, as long as the price stays above 1.3370 on a daily basis, the bearish action may be limited. At this point, we will see 1.3433 and 1.3485 as resistance levels again. On the other hand, if the price falls below 1.3370, the next support level can be found at 1.3305.
Support: 1.3370 – 1.3305 – 1.3241
Resistance: 1.3432 – 1.3485 – 1.3555
USD/JPY: The USD/JPY pair has shown a bullish action for two weeks and reached the 113.63 key resistance level. In order for the bullish action continue, it needs to rise and remains above 113.63. In this case, the next resistance level will stand at 114.11. On the other hand, if the price shows a downward movement, we will watch again support level at 112.94 and 112.46
Support: 112.94 – 112.46 – 112.08
Resistance : 113.63 – 114.11 – 114.63
GOLD: The Gold price found sellers from the daily resistance level of 1276 and then dropped to the 1243 daily support level. In order for the bearish action to continue next week, it needs the breakdown and closed the week below 1243. At this point, the next support level will be at 1235. Otherwise, the bearish action may be limited and we will face resistance levels at 1256 and 1265.
Support: 1243 – 1235 – 1230
Resistance: 1249 – 1256 – 1265