Key Economic Data - Coming Up Today(All Times GMT+3)
The EURUSD slumped to 1.2427 following the decline of Crude Oil and Gold on Friday. The EURUSD had been up at 1.2500 before Crude Oil broke below $70 tumbling all the way to $65.75 and Gold fell ahead of the Swiss Gold Referendum. Gold closed the week at $1165 down from a weekly high of $1208. Following Sunday's news of the Swiss rejection of the referendum Gold declined to $1142.80 following a $7 gap at the open. Overnight the Chinese Manufacturing data was released in line with expectations while the EUR Final Manufacturing PMI was weaker than expected. UK Manufacturing PMI exceeded expectations with a figure of 53.5 boosting expectations for a recovery in the UK economy. The data helped the pound recover from 1.5605 to 1.5690. Coming up this afternoon in the US Final Manufacturing PMI, ISM Manufacturing PMI and speeches by FOMC Members Dudley and Fisher. This morning the USDJPY made a new high above 119 at 119.14 and has sold off sharply falling to 118.10 within 30 minutes. On the EURUSD if the 1.2402 level is also broken to the downside this will signal an increased possibility that the price will cave in and make new lows. A potential break below 1.2357 will create 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 is still hovering at all-time highs just above 17,830.
The RSI on the EURUSD Weekly Chart has crossed back above 30 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 1.2358, 1.2335, 1.2300, 1.2200, 1.2150. Resistance levels above are at 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 a few weeks of relative stability in Gold trading the Swiss SNB Gold Asset Vote sparked a new round of volatility. Gold had risen up from $1130 to reach up to $1208 over a three week winning period which was ended by a decline last week. This morning the price reached $1142.80 amounting to $66 decline and the equivalent of 5.5% fall in the tradable value of Gold. Swiss voters rejected the proposal for the Swiss National Bank to hold 20% of its assets in Gold. Switzerland has 550 billion CHF in assets spread between various asset classes and foreign currencies such as EUR and USD. If voters had chosen to adopt the new legislation this would have required the SNB to purchase in excess of 100 billion CHF worth of Gold over three years. Had the proposal been accepted it is reasonable to conclude that other nations may have tabled a similar proposal. Backing a portion of all nations assets with physical Gold would have led enormous demand strains on the supply of Gold and almost certainly increased the price of the precious metal. The No Vote of 80% has alleviated fears of this outcome and has led to a sell-off in Gold which had climbed higher on the potential of Yes vote in Switzerland, a nation famous for its history of holding large quantities of Gold. Gold had opened the last week at $1201.50 an ounce and this week's open was at $1159.50 a full $40 lower. The failure to close above $1200 last week is bearish, to the downside the $1180 support followed by $1174, $1145 have all been broken and only the $1130 level remains in defense. Gold has also suffered due to the wild declines in Crude Oil and the strength of the USD. Silver is trading at $15.69.
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.
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 $1195, $1205, $1215, $1225, $1235, $1240.
Gold 5 Minute Chart
Gold 4 Hour Chart
Gold Pivot Point Table