Weekly Technical Analysis For November 20th to 24th, 2017
EUR/USD: The Euro rose to a 3-week high versus the greenback, with strong Eurozone and German GDP numbers. The data showed that the Eurozone economy grew by an annualized 2.5% in the third quarter, outstripping growth in the US economy. Another report showed that the German economy grew a larger-than-expected 0.8% in the third quarter, thanks to strong trade and investment figures. The upbeat data indicated that the European Central Bank tapering plans are likely to remain on track.
Another important news was about the US tax reform last week. The US House of Representatives approved a broad package of tax cuts, which will now be debated by the Senate. Investors were still cautious, however, as the Republican majority is smaller in the Senate and no decisive action is expected until after next week Thanksgiving holiday. If passed as is, the corporate tax rate will be cut to 20% from 35%.
In the upcoming week, the notes from the Federal Open Market Committee (FOMC) meeting in November will be the most significant release. The FOMC kept the benchmark interest rate at 1.00-1.25%, as expected. However, the Fed said "Economic activity is rising at a solid rate, despite storms, and the labor market is continuing to strengthen. Additionally, unemployment is declining.
Additionally, The Fed is scheduled to hold its final policy meeting of the year on December 12-13, with interest rate futures pricing in a 100% chance of a rate hike at that meeting, Also, the Fed is currently forecasting three interest rate hikes. The notes may help forecasters model the upcoming decisions from the central bank. We might see some fluctuations in the US Dollar in the next week.
The EUR/USD pair showed a bullish action and gained value more than 300 pips in the last two weeks. In order for the bullish action gain more momentum, it needs to rise and remain above the 1.1812 main resistance level, on a daily basis. In this case, the next resistance level can be found at 1.1884. Otherwise, if the price pullbacks below 1.1812, we will watch support levels at 1.1769 and 1.1720.
Support: 1.1769 – 1.1720 - 1.1660
Resistance: 1.1812 – 1.1884 – 1.1968
GBP/USD: In UK, the second estimate of GDP growth for the third quarter will be the main release of the week. No change from previously announced 0.4% q/q is expected by the market and it stands for 1.5%, as the same as registered in the previous quarter. Any negative surprise would weigh on GBP/USD pair.
The GBP/USD pair found buyers above the 1.3050 key support level and moved up for a consecutive five days session. In order for the upward movement to continue, it needs to rise and stays above the key resistance level of 1.3241 on a daily basis. At this point, the next resistance level will be at 1.3305. Otherwise, if the price shows a downward movement below 1.3241, we will watch support levels at 1.3199 and 1.3152.
Support: 1.3199 - 1.3152 – 1.3103
Resistance: 1.3241 – 1.3305 – 1.3370
USD/JPY: The USD/JPY pair found sellers from the daily resistance level of 114.63 and it has been falling for two weeks. In the event that, if the price continues to drop below 112.08, the next daily support level will be at 111.66. However, as long as the price stays above 111.66, the bearish action may be limited. On the other hand, the price moves up above 112.08, we will face 112.46 and 112.94, as resistance levels.
Support: 112.08 – 111.66 – 111,28
Resistance : 112.46 – 112.94 – 113.63
GOLD: The Gold price found buyers from the 1276 daily support level last Thursday and rose significantly. As long as the price sustains above the 1291 key support level on a four-hourly basis, the bullish action may continue. In this case, we will face a daily resistance level of 1307. On the other hand, if the price shows a downward movement below 1291, the next support level can be found at 1283.
Support: 1291 – 1283 - 1276
Resistance: 1307