Key Economic Data - Coming Up Today(All Times GMT+3)
The EURUSD fell from 1.2508 yesterday to as low as 1.2320 this morning losing almost 2 cents in value. The pair had a double bottom at 1.2357 and returned for a third time earlier this morning to retest the support at the low. The price caved in and the pair fell quickly to a new low of 1.2320 while the price is now up to 1.2335. Recent weakness in Crude Oil has weighed on the Euro and benefited the USD against Yen, Euro, Ruble and many other currencies. This morning Spanish Services PMI came in weaker than estimates but the Italian Service PMI data surprised to the upside. Final Services PMI for the Eurozone was slightly weaker than expected at 51.1 vs expectations of 51.3. Crude Oil rose from $63.75 to $69.58 and has since fallen back to trade as low as $67.70 a barrel. Gold has climbed as high as 1208.50 today and strong upside momentum is building. Coming up today GBP Services PMI is next up on the calendar, followed by EUR Retail Sales. In the afternoon the focus moves to US and Canadian news, with the main highlight being the ADP Non-Farm Employment Change in the US. As a precursor of Friday official government NFP figures due out on Friday this is a key report for the US Dollar, US markets and global markets and fx. Canadian Overnight Rate and BOC Rate Statement will affect the Canadian Dollar today while US ISM Non-Manufacturing PMI and US Crude Oil Inventories make up the rest of the key news for the day. For the EURUSD the pair broke the 1.2444 level, the 1.2402 level and the low at 1.2357. The break below 1.2357 which has created new yearly and two-yearly lows and could lead to margin calls and euro selling that will force the pair within reach of the 1.2000 level. This is particularly the case given that we are coming into the last month of the year and new lows will push longs into an uncomfortable position. The US DJIA reached new all-time highs around 17,890.
The RSI on the EURUSD Weekly Chart has crossed back below 30 reaching 26.8, following volatility round the 30 figure. Readings of 30 and below on the RSI are considered oversold and this could raise the possibility of a near term recovery in the pair. The next move will be to see if the RSI stabilizes and moves higher or if it will fall back towards the reading of 15 made in September this year. The EURUSD has declined for each of the last 5 months and opened for December at 1.2437. Any close above this level for December will break the run before it turns six consecutive months.
At present the Euro is under pressure with the pair below 1.30 and still trading below the downtrend channel as seen in the H4. As long as the pair remains below 1.30 and below the downtrend channel, the bias remains bearish. - This has been our consistent outlook for three months. The pair has been below the key 1.30 level for eight consecutive weeks. To change the trend the EURUSD must consolidate above 1.2500 and rise above 1.2883 raising the prospects of a near term upside correction in the pair following months of declines. Last week's second consecutive weekly close below 1.2500 after holding above this level for most of the week sent a bearish signal to investors.
EURUSD Support areas include 1.2320, 1.2300, 1.2250, 1.2200, 1.2150. Resistance levels above are at 1.2357, 1.2450, 1.2600, 1.2700, 1.2845, 1.2800, 1.2900 & 1.30.
EURUSD 5 Minute Chart
EURUSD 4 Hour Chart
EURUSD Pivot Point Table
Following the largest one day move this year and the largest one day advance this year for Gold the Gold market has stabilized. As discussed yesterday the strong move higher could signal greater gains for Gold. In addition the positive reaction to negative news from the Swiss Gold Referendum is also encouraging. The old trading proverb says 'If a market doesn't move lower on bad news then buy!’ Only time will tell if this principle plays out in the Gold trade. This latest move set a new 5 week high for Gold. The previous high had been at $1208 which is also close to the current level and now the new high of this uptrend is set at $1221.08. Last week ended a run of three weeks of consecutive gains although the trend is now set for a resumption in the recovery of the Gold price. With Gold at $1205 it is unchanged for the year vs the US Dollar, while against the EUR Gold is almost 10% higher for the year and is up over 15% against the Yen.
December will be key to determining if Gold can recover up above $1200 and continue to erase some of this years losses. Gold opened the year at $1205 an ounce and therefore is only 2% down for the year. In the early months of this year Gold had advanced as high as $1388 an ounce and as such is $200 off the yearly highs for 2014. With a just over a month until the end of this year it is integral to see if Gold closes higher or lower than the Jan 1st 2014 level. Between 1999 and 2013 for 14 consecutive years the price rose year to year. In 2013 the price opened the year at $1674 and closed at $1205 posting a first yearly loss in 15 years. Therefore it is key to see if the year to year loss extends into a second year of if Gold can shrug of 2013 as a bad year and recover back up towards the 2011 all-time high of $1921. It is important to see if Gold can post a winning week for this week and also Gold needs a yearly close above $1205 to be higher for the year. Gold this week opened at $1159.50 a full $40 lower than it had opened the last week at $1201.50 an ounce . The failure to close above $1200 last week is bearish, to the downside the $1180 support followed by $1174, $1145 and $1130 are all back in play level.
Gold prices have fallen from $1345 an ounce in August to as low as $1130 in November, erasing $215 from the value of Gold. The $1180 area remains the key to a recovery in Gold which is down from above $1900 in 2011. Gold had advanced from $245 an ounce in 1999 to $1921 in 2011 posting 12 years of straight gains. Now the market has leveled off. Now the price is above $1180 the odds of a recovery are improved, if the price slips below $1180 the outlook turns bearish.
Support levels for Gold can be seen at $1180, $1160 $1140, $1130, $1125, $1115, $1100. Resistance to the upside materializes at $1205, $1215, $1225, $1235, $1240.
Gold 5 Minute Chart
Gold 4 Hour Chart
Gold Pivot Point Table