The US dollar started the week softer against all of its G10 counterparts. The Japanese yen has been the biggest winner, as the USD/JPY (+1.27%) retreated to 111.36 in Tokyo. Dip buyers are presumed at 111.15 (200-hour moving average) and 110.87 (minor 23.6% retracement on post-Trump rally). The EUR/JPY is testing the solid 100-hour moving average support (118.90) on the downside.
The European Central Bank (ECB) President Mario Draghi is due to speak before the European Parliament’s Economic Committee in Brussels at 14:00 GMT. Draghi is expected to maintain the dovish rhetoric due to the moderate growth in the euro area, hampered by the Brexit uncertainties. Traders will be seeking any clue about the future of the ECB’s asset purchases program. The single currency is subject to downside risks. Hence, a broad based sell-off in the euro could send the EUR/JPY below the 100-hma and limit the recovery in EUR/USD before 1.0700/1.0702 (minor 23.6% retracement on Nov 9th to Nov 24th decline). Decent option barriers stand at 1.07 at today’s expiry.
The softer US dollar revived the carry appetite at the start of the week. The AUD/USD extended gains to 0.7480. The golden cross formation (50-hour moving average crossing above the 200-hour moving average) is expected to encourage a further recovery toward 0.7500, before 0.7544 (major 38.2% retracement on Nov 9th to Nov 21st decline). The upside resistance is expected to be light.
Gold took a breather after having hit the critical mid-term support at $1170 (major 61.8% retracement on Dec’15 to Jul’16 rise). Light $1200-puts could generate dip buying opportunities further recovery targeting $1198 (100-hour moving average) and $1210 (200-hour moving average).
Oil gapped lower at the open, as traders remained skeptical regarding a deal before the critical OPEC meeting due on November 30th. Although leading OPEC members are willing to agree on a production cut, the outcome of this week’s meeting could result in a zero-sum game, meaning that any production cut from the OPEC would be countered by higher production level elsewhere, hence keep the downside pressures tight on the prices. The WTI is trading in the bearish consolidation zone; solid offers are expected to come in play at $46.75/46.95 (major 38.2% retracement on Nov 14th to Nov 22nd recovery / 200-hour moving average).