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USD/CAD Daily chart

  • USD/CAD is trading in a bull trend above the 200-period simple moving average (SMA).

USD/CAD 4-hour chart

  • USD/CAD is rejecting the 50 SMA.

USD/CAD 30-minute chart

  • Bears are trading below the main SMAs and need to break below the 1.3240 support in order to reach the 1.3180 level. 
  • On the flip side, resistance is seen at the 1.3300 figure. 

Additional key levels 

USD/CAD

Overview:
    Today Last Price: 1.3244
    Today Daily change: -25 pips
    Today Daily change %: -0.188%
    Today Daily Open: 1.3269
Trends:
    Previous Daily SMA20: 1.3486
    Previous Daily SMA50: 1.3362
    Previous Daily SMA100: 1.3193
    Previous Daily SMA200: 1.3091
Levels:
    Previous Daily High: 1.3296
    Previous Daily Low: 1.3226
    Previous Weekly High: 1.339
    Previous Weekly Low: 1.318
    Previous Monthly High: 1.4134
    Previous Monthly Low: 1.316
    Previous Daily Fibonacci 38.2%: 1.3253
    Previous Daily Fibonacci 61.8%: 1.3269
    Previous Daily Pivot Point S1: 1.3232
    Previous Daily Pivot Point S2: 1.3195
    Previous Daily Pivot Point S3: 1.3163
    Previous Daily Pivot Point R1: 1.3301
    Previous Daily Pivot Point R2: 1.3333
    Previous Daily Pivot Point R3: 1.337

 

Swiss National Bank (SNB) Chairman Thomas Jordan has recently crossed the wires arguing that Brexit was a risk for Europe and the final outcome could have an effect on the CHF's exchange rate.

Key quotes (via Reuters)

  • Interest rates and currency interventions are powerful instruments, are having an effect.
  • Central Bank has contributed to Switzerland coming through finance crisis.
  • Current monetary policy is appropriate and there is no reason to change it.
  • Cconomic uncertainties have increased in recent months, including Brexit.
  • Interest rate differential to euro area very important, plays important role.
  • The franc has stablised but remains highly valued.
  • Currency markets remain fragile, uncertainty has increased not just because of Brexit.
  • Franc is still a safe haven, when uncertainty rises investors seek the franc.
  • There is no risk in near future of Swiss inflation rising.
  • Negative interest rates are difficult for the pension funds and affect the property market.
  • If we increased interest rates, Swiss economy would be affected and have negative impact on pensions.

  • Aussie recovers ground against US dollar, still down for the day. 
  • Weaker US dollar and risk appetite support AUD/USD move higher. 

The AUD/USD pair is consolidating below 0.7200. During the American session moved off lows on the back of a slide of the greenback but remain in negative territory for the day. 

Earlier today, the demand for the greenback pushed AUD/USD to 0.7160, the lowest in almost a week. After finding support, recovered as the DXY moved off daily highs. Recently the pair reached 0.7188 and pulled back to 0.7180, where it stands. The improvement in risk sentiment also supported the Aussie. Equity prices in Wall Street are up with the Dow Jones rising 0.60% and the Nasdaq 0.45%. 

Price action across financial markets remain limited. In the UK, the no-confidence vote against PM May will take place around 19:00 GMT. At that time in the US, the Beige Book will be released. 

Levels to watch 

Despite the recovery, momentum still favors the downside in AUD/USD near-term. A firm recovery above 0.7200 will likely remove the bearish pressure and open the doors to a test of the 0.7210 resistance, above attention would turn to the weekly high at 0.7225. On the flip side, support levels might lie at 0.7160 (daily low), followed by 0.7145 and 0.7115 (last week low). 

"While the 2-10 year US treasury yield spread has moved sideways in recent weeks, the recent plunge in the 12m-10y spread has activated our early warning system and now gives a 69% chance of a recession by May 2020," note Rabobank analysts.

Key quotes

"The US treasury yield curve is increasingly pointing at 2020 as the year of the next recession. The first cracks in the housing market confirm our suspicion that monetary policy error is the cause of the next recession as the higher level of interest rates has started to slow down aggregate demand."

"In fact, it seems that this sequence of events leading to a recession has started before a full inversion of the US treasury yield curve. Even if the Fed were to abandon its hiking cycle immediately, the damage may already have been done."

"The current GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2018 is 2.8 percent on January 16, unchanged from January 10," the Federal Reserve Bank of Atlanta reported on Wednesday. "The nowcast of the contribution of net exports to fourth-quarter real GDP growth inched down from -0.50 percentage points to -0.52 percentage points after this morning’s U.S. Import and Export Price Indexes release from the U.S. Bureau of Labor Statistics."

  • US stocks struggle to push higher on Wednesday.
  • US Dollar Index continues to move sideways above 96.
  • Coming up: Fed's Beige Book and no confidence vote in UK.

Since failing to surpass the $1300 mark earlier in January, the XAU/USD pair has been fluctuating in a tight range and today's price action is no different. After easing below the $1290 earlier in the day, the pair edged higher in the last hour and renewed its session high at $1295. As of writing, the pair was up 0.4% on the day at $1294, adding $5 on a daily basis.

The recent uptick witnessed in the pair seems to be a product of souring market sentiment as reflected by the trading action in Wall Street. Following a positive start to the day, major equity indexes in the U.S. were able to push higher before losing their traction. The Dow Jones Industrial Average, which added as much as 0.75%, was last up 0.4% and the Nasdaq Composite was clinging to small gains, rising only 0.1%. 

On the other hand, with the greenback staying in the green above the 96 handle, the pair is unlikely to challenge the critical $1300 mark. Today's data from the U.S. showed that the housing sector has shown a slight improvement with the NAHB's Business Confidence Index coming in 58 vs market expectation of 56.

Later in the session, markets will be paying close attention to the leadership challenge in the UK. Although it seems unlikely, if British Prime Minister Theresa May loses the confidence vote and the UK goes for a general election, safe-havens could start to gather strength against its rivals. 

Technical levels to consider

XAU/USD

Overview:
    Today Last Price: 1294.4
    Today Daily change: 5.3e+2 pips
    Today Daily change %: 0.414%
    Today Daily Open: 1289.06
Trends:
    Previous Daily SMA20: 1278.53
    Previous Daily SMA50: 1247.69
    Previous Daily SMA100: 1230.43
    Previous Daily SMA200: 1228.94
Levels:
    Previous Daily High: 1294.75
    Previous Daily Low: 1286.95
    Previous Weekly High: 1297.15
    Previous Weekly Low: 1279.35
    Previous Monthly High: 1284.7
    Previous Monthly Low: 1221.39
    Previous Daily Fibonacci 38.2%: 1289.93
    Previous Daily Fibonacci 61.8%: 1291.77
    Previous Daily Pivot Point S1: 1285.76
    Previous Daily Pivot Point S2: 1282.45
    Previous Daily Pivot Point S3: 1277.96
    Previous Daily Pivot Point R1: 1293.56
    Previous Daily Pivot Point R2: 1298.05
    Previous Daily Pivot Point R3: 1301.36

 

  • Crude oil prices stay on the defensive in sub-$52.00 levels.
  • Prices of the WTI met resistance ahead of the 55-day SMA.
  • US crude oil inventories dropped by around 2.7M barrels last week.

Prices of the WTI keep navigating the red territory today in levels below the $52.00 mark per barrel in spite of the larger-than-expected draw reported by the EIA.

WTI offered below $52.00/bbl

After testing new YTD peaks beyond the $53.00 milestone last Friday, prices of the barrel of West Texas Intermediate have come under some selling pressure in the last couple of sessions

and are now trading on the defensive despite US crude oil supplies dropped by 2.680M barrels during last week.

Additionally, Weekly Distillate Stocks increased by 2.967M barrels and Gasoline inventories went up by 7.503M barrels, more than initially expected.

Furthermore, inventories at Cushing decreased by 0.743M barrels, reverting last week’s 0.330M barrels build.

In the meantime, prices of the WTI appear sidelined amidst renewed concerns among traders over the likelihood of a global slowdown, although the downside seems limited by the ongoing OPEC+ deal to curb oil output.

Moving forward, driller Baker Hughes will release its weekly report on the US oil rig count on Friday.

WTI significant levels

At the moment the barrel of WTI is down 0.99% at $51.48 and a breakdown of $50.34 (low Jan.14) would open the door to $48.00 (21-day SMA) and then 42.20 (2018 low Dec. 24). On the upside, the initial hurdle lines up at $52.75 (55-day SMA) followed by $53.22 (2019 high Jan.11) and finally $54.48 (high Dec.4).

  • GBP/USD is sideways following a tremendous, albeit, suspect, comeback rally following Prime Minister May's impressive defeating Brexit deal vote which triggered the opposition party to table a no-confidence vote.
  • Markets are now waiting for the outcome of the UK Parliament's no-confidence vote that is due at 1900GMT. 

GBP/USD is currently trading between 1.2841 and 1.2895, in a sideways chop as traders soak up the market's rather atypical reaction to what is actually still a very poor position for UK business, confidence and the economy which also leaves the BoE on the sidelines for the foreseeable future. 

The vote was hugely against PM May's Brexit plan. The humiliating defeat takes her back to the drawing board. However, first of all, before she can inact plan B, whatever that might be, the Prime Minister has to get through a no-confidence motion tabled by the Labour Party opposition leader Corbyn. Corbyn is attacking what he has called, "a zombie government" that "cannot govern" while calling for a general election. 

Opening the debate on a no-confidence motion, Mr Corbyn said the government "should do the right thing and resign" after Tuesday night's record-breaking defeat on its Brexit legislation. The prime minister proclaimed that a general election was "simply not in the national interest". 

EU has given no indication they were willing to make concessions, but 'keep calm and carry on'

The price action in sterling is hard to reconcile considering the dangers that the UK businesses and economy are facing. UK confidence has been unrooted, yet markets are taking the circumstances in its stride, speculating that all will be ok. The uncertainty alone which has previously sent sterling down the plug hole seems to have run its course concerning how much further it can damage the pound. Instead 'keep calm and carry on," is echoed around the dealing rooms, despite that the EU has given no indication they were willing to make concessions.

As such, without any concessions, this increases the chances of a no-deal Brexit, leaving PM May, Brexit, and for that matter, sterling, in a rather precarious position and regardless of whether, as expected, May wins the vote of no confidence. 

GBP/USD levels

Cable has completed a falling wedge reversal pattern and targets the 200-D SMA at 1.3112. "Only a rise above the July, September and October highs at 1.3258/1.3363 would put the June high at 1.3473 on the cards," analysts at Commerzbank argued who suggest below 1.2444/27 will target the 78.6% retracement at 1.2109.

If May wins the vote, this will underpin hopes that an eventual passage is still possible and could see spot continue its northerly trajectory rally towards the 38.2% Fibo retracement of the 2018 decline target between there, the 1.3270s, and 1.32 the figure. An extension to 1.33 would complete a full reversal os the Oct 2018 decline to date. However, given the fragility of confidence in May's ability and poor track record of negotiating with a stubborn EU that have shown no signs of awarding concessions to the agreed deal, between R2 located at 1.3065 and the 74.6% Fibo retracement of the Oct decline just below 1.31 the figure could be a more reasonable target area.  Having said that, the market might be more inclined to fade any rallies, depending on the outcome, and we may see sterling sideways as the markets look for a more definitive progression with Brexit at this juncture. That would leave cable oscillating within a familiar, yet, unpredictable ranges. 
 

  • Alternating trends continue to dominate the pair’s price action.
  • The greenback eases from daily highs near 96.20.
  • US Import Prices contracted 1.0% MoM in December.

After briefly testing sub-1.1380 levels – or session lows - EUR/USD has managed to regain some composure and return to the 1.1400 neighbourhood amidst volatile risk trends.

EUR/USD focused on Beige Book, UK politics

Despite the ongoing rebound, the pair remains under pressure within the broader correction lower from peaks in the 1.1580 area recorded last week, so far with support holding on to the 1.1380 region, where sits the 55-day SMA.

Price action today remains limited and within recent ranges, while markets’ attention remains on the imminent no-confident vote in the UK. According to prior surveys, PM Theresa May is expected to survive the vote, although she should bring in a ‘plan B’ to the table on Monday.

No news from the calendar in Euroland today, where Italian and German December CPI figures matched the preliminary prints. In the US, Import Prices contracted less than expected 1.0% MoM during the last month of 2018.

What to look for around EUR/USD

The likelihood of extra gains in spot is losing traction amidst a somewhat improved tone in the buck and the recent cautious/dovish tone from the ECB. Looking ahead,  investors would likely pay increasing attention to the performance of the economy in the bloc amidst the ongoing slowdown and upcoming events including discussions around the French budget, Brexit and EU Parliamentary elections in May, while the probability of a technical recession in Germany in H2 2018 would also collaborate with the cautious sentiment.

EUR/USD levels to watch

At the moment, the pair is retreating 0.1612 at 1.1399 facing immediate contention at 1.1378 (low Jan.16) seconded by 1.1356 (23.6% Fibo of the September-November drop) and then 1.1306 (2019 low Jan.3). On the upside, a break above 1.1424 (high Jan.16) would target 1.1442 (38.2% Fibo of the September-November drop) and finally 1.1471 (100-day SMA).

Below are some key highlights from the weekly oil market report published by the U.S. Energy Information Administration.

  • U.S. crude oil refinery inputs averaged 17.2 million barrels per day during the week ending January 11, 2019.
  • Gasoline production increased last week, averaging 9.6 million barrels per day.
  • Distillate fuel production decreased last week, averaging 5.4 million barrels per day.
  • U.S. commercial crude oil inventories decreased by 2.7 million barrels from the previous week. 
  • Total products supplied over the last four-week period averaged 20.1 million barrels per day, down by 2.1% from the same period last year. 

  • Wall Street extends gains after opening in the green.
  • US Dollar Index clings to daily gains above 96.
  • Housing market shows signs of improvement in the U.S.

After staying quiet around the 108.80 area for the last few hours, the USD/JPY pair started to climb and touched its highest level in a week at 108.92. As of writing, the pair was trading a couple of pips below that level, adding 0.22% on the day.

Despite a subdued trade action in the FX space on Wednesday, improved market sentiment in the second half seems to have provided a small boost to the pair. Following a positive start to the day, major equity indexes in the U.S. pushed higher supported by strong earnings figures from big financial institutions and made it difficult for safe-havens to find demand. At the moment, the Dow Jones Industrial Average is up 0.6% on the day.

Meanwhile, today's data from the U.S. showed that builder confidence in January rose with the NAHB's Housing Market Index advancing to 58 from 56 in December. Nevertheless, the greenback didn't show a significant reaction to the data and the US Dollar Index stays in the upper half of its daily range a little above the 96 mark, where it's adding 0.1% on the day.

Later in the session, the Fed's Beige Book will be looked upon for fresh impetus.

Key technical levels

USD/JPY

Overview:
    Today Last Price: 108.9
    Today Daily change: 23 pips
    Today Daily change %: 0.212%
    Today Daily Open: 108.67
Trends:
    Previous Daily SMA20: 109.6
    Previous Daily SMA50: 111.8
    Previous Daily SMA100: 112.12
    Previous Daily SMA200: 111.16
Levels:
    Previous Daily High: 108.78
    Previous Daily Low: 108.13
    Previous Weekly High: 109.09
    Previous Weekly Low: 107.77
    Previous Monthly High: 113.83
    Previous Monthly Low: 109.55
    Previous Daily Fibonacci 38.2%: 108.53
    Previous Daily Fibonacci 61.8%: 108.38
    Previous Daily Pivot Point S1: 108.27
    Previous Daily Pivot Point S2: 107.88
    Previous Daily Pivot Point S3: 107.63
    Previous Daily Pivot Point R1: 108.92
    Previous Daily Pivot Point R2: 109.17
    Previous Daily Pivot Point R3: 109.57

 

EUR/USD Daily chart

  • EUR/USD is trading in a bear trend below its 200-day simple moving averages (SMAs).  
  • EUR/USD is finding some mild support at the 50 SMA.
  • Investors must be cautious as Conservative Party lawmakers will vote for or against PM Theresa May amid growing discontent on the Brexit deal at 19.00 GMT this Wednesday.

EUR/USD 4-hour chart

  • EUR/USD is trading just below the 200 SMA. 

EUR/USD 30-minute chart

  • After Tuesday’s drop EUR/USD is set to remain in a tight range on Wednesday as bears will try to break below 1.1380 and bulls will attempt a break of the 1.1420 resistance. 
  • Caution is advised as Brexit-related news can indirectly affect EUR/USD. 

Additional key levels 

EUR/USD

Overview:
    Today Last Price: 1.1396
    Today Daily change: -17 pips
    Today Daily change %: -0.149%
    Today Daily Open: 1.1413
Trends:
    Previous Daily SMA20: 1.1432
    Previous Daily SMA50: 1.1385
    Previous Daily SMA100: 1.1471
    Previous Daily SMA200: 1.1619
Levels:
    Previous Daily High: 1.1491
    Previous Daily Low: 1.1382
    Previous Weekly High: 1.1571
    Previous Weekly Low: 1.1396
    Previous Monthly High: 1.1486
    Previous Monthly Low: 1.1269
    Previous Daily Fibonacci 38.2%: 1.1424
    Previous Daily Fibonacci 61.8%: 1.145
    Previous Daily Pivot Point S1: 1.1366
    Previous Daily Pivot Point S2: 1.1319
    Previous Daily Pivot Point S3: 1.1257
    Previous Daily Pivot Point R1: 1.1476
    Previous Daily Pivot Point R2: 1.1538
    Previous Daily Pivot Point R3: 1.1585

 

"Buoyed by falling mortgage rates, builder confidence in the market for newly-built single-family homes rose two points to 58 in January," the National Association of Home Builders (NAHB) reported on Wednesday.

Key takeaways from the press release

  • The gradual decline in mortgage rates in recent weeks helped to sustain builder sentiment.
  • Low unemployment, solid job growth and favorable demographics should support housing demand in the coming months.
  • The index measuring current sales conditions rose two points to 63, the component gauging expectations in the next six months increased three points to 64 and the metric charting buyer traffic edged up one point to 44.

  • DXY has once again tested and failed around the 96.20/30 resistance band.
  • The 100-day SMA around 96.00 the figure remains an important magnet for the time being, while decent support is seen in the 95.80 zone, coincident with the 10-day SMA.
  • In the meantime, the greenback is trying to return to the previous 95.70-97.70 range, although a more serious bullish attempt should see the 96.20/30 band cleared.

DXY daily chart

Dollar Index Spot

Overview:
    Today Last Price: 96.04
    Today Daily change: 9.0 pips
    Today Daily change %: 0.0938%
    Today Daily Open: 95.95
Trends:
    Previous Daily SMA20: 96.28
    Previous Daily SMA50: 96.66
    Previous Daily SMA100: 96.02
    Previous Daily SMA200: 94.92
Levels:
    Previous Daily High: 96.26
    Previous Daily Low: 95.47
    Previous Weekly High: 96.12
    Previous Weekly Low: 95.03
    Previous Monthly High: 97.71
    Previous Monthly Low: 96.06
    Previous Daily Fibonacci 38.2%: 95.96
    Previous Daily Fibonacci 61.8%: 95.77
    Previous Daily Pivot Point S1: 95.53
    Previous Daily Pivot Point S2: 95.1
    Previous Daily Pivot Point S3: 94.74
    Previous Daily Pivot Point R1: 96.32
    Previous Daily Pivot Point R2: 96.68
    Previous Daily Pivot Point R3: 97.11

 

  • The index fails once again near the 96.20 area.
  • Yields of the US 10-year note retreat a tad after moving above 2.74%.
  • US Import Prices contracted 1.0% MoM in December.

The upside momentum in the greenback lost momentum in the 96.20 region and is now hovering over the key 96.00 area when tracked by the US Dollar Index (DXY).

US Dollar Index stays capped by 96.20/30

The index keeps the bid tone well and sound for the second session in a row, although the 96.20/30 band emerges as a tough barrier for USD-bulls for the time being.

In the data space, DXY paid little attention to the publication of today’s data, with Import Prices contracting 1.0% MoM in December and Export Prices followed suit, down 0.6% from a month earlier.

What to look for around USD

The ongoing negotiations around the US-China trade dispute and the continuation of the partial shutdown in the US government have been relegated to the backburner for the time being. Instead, investors are paying more attention to the renewed ‘flexible and patient’ stance from the Federal Reserve (as per latest FOMC minutes and recent Fedspeak) and the potential re-pricing of the Fed’s tightening cycle. In this regard, the health of the domestic economy should remain under scrutiny amidst the enhanced ‘data-dependency’ stance of the Fed.

US Dollar Index relevant levels

At the moment, the pair is up 0.05% at 96.02 and a break above 96.26 (high Jan.15) would target 96.61 (55-day SMA) en route to 96.96 (2019 high Jan.2). On the downside, the next support arises at 95.78 (10-day SMA) seconded by 95.03 (2019 low Jan.3) and finally 94.97 (200-day SMA).

Major equity indexes in the U.S. started the day modestly higher supported by the financial sector. As of writing, the Dow Jones Industrial Average was up 0.42% on the day while the S&P 500 and the Nasdaq Composite were adding 0.32% and 0.36%, respectively.

Strong earnings reports from Goldman Sach and Bank of American earlier in the day boosted the market sentiment on Wednesday and the S&P 500 Financials Index were up more than 1% in the early trade to lead the gains. Out of 11 major S&P 500 sectors, only the utilities and consumer staples sectors are in the negative territory. Among winners, materials and industrials both rise around 0.5% to trail financials.

Later in the session, the Fed will be publishing its Beige Book, which paints a clear picture of the overall health of the economy. Investors will also be paying close attention to the no confidence vote in the UK.

   •  The pair finally broke down of this week's consolidative trading range and fell to a one-week low, closer to mid-0.7100s during the European trading session on Wednesday.

   •  A sustained weakness below the 0.7180 strong support was seen as a key trigger for bearish traders, though the selling pressure now seems to have abated near 200-hour SMA. 

   •  Technical indicators on hourly charts have been gaining negative momentum and point to an extension of the recent corrective slide from near 1-month tops set last Friday.

AUD/USD 1-hourly chart

   •  However, oscillators on the daily chart have managed to hold in the bullish territory, though have struggled to gain traction, and might help limit any meaningful downside.

   •  Hence, it would be prudent to wait for a strong follow-through selling before confirming that the pair might have topped out in the near-term and positioning for further decline.

AUD/USD

Overview:
    Today Last Price: 0.7179
    Today Daily change: -21 pips
    Today Daily change %: -0.292%
    Today Daily Open: 0.72
Trends:
    Previous Daily SMA20: 0.7098
    Previous Daily SMA50: 0.7188
    Previous Daily SMA100: 0.7174
    Previous Daily SMA200: 0.7326
Levels:
    Previous Daily High: 0.7226
    Previous Daily Low: 0.7179
    Previous Weekly High: 0.7236
    Previous Weekly Low: 0.7089
    Previous Monthly High: 0.7394
    Previous Monthly Low: 0.7014
    Previous Daily Fibonacci 38.2%: 0.7208
    Previous Daily Fibonacci 61.8%: 0.7197
    Previous Daily Pivot Point S1: 0.7178
    Previous Daily Pivot Point S2: 0.7155
    Previous Daily Pivot Point S3: 0.7131
    Previous Daily Pivot Point R1: 0.7225
    Previous Daily Pivot Point R2: 0.7249
    Previous Daily Pivot Point R3: 0.7272

 

  • WTI stays in consolidation below $52.
  • US Dollar Index clings to small gains above 96.
  • Weekly EIA crude oil report next in the calendar.

Since failing to break above the 1.33 mark earlier this week, the USD/CAD pair trades in a relatively tight range and is having a difficult time setting its next short-term direction. As of writing, the pair was down 0.1% on a daily basis at 1.3245.

Indecisive movements of crude oil since the start of the week continue to make it difficult for the commodity-sensitive loonie to find a directional clue. Despite Saudi Arabian energy minister's optimistic comments about the oil market outlook, the barrel of West Texas Intermediate fluctuates around the $52 mark. As markets are waiting for the weekly EIA report, the WTI is down 0.15% on the day at $51.88.

On the other hand, the greenback is also moving within a consolidation channel around the 96 mark to allow the pair to sit comfortably below 1.33. Today's data from the U.S. showed that the import price index declined by 1% on a monthly basis in December amid falling oil prices, but was largely ignored by the participants. Later in the session, the Fed will be publishing its Beige Book. At the moment, the DXY is up 0.1% on a daily basis at 96.06.

Technical levels to consider

With the pair struggling to gain traction, the RSI indicator on the daily chart continues to move sideways a little above the 30 mark, suggesting that buyers have no interest in the pair. Above 1.3300 (psychological level/Jan. 14 high), the pair could extend its gains toward 1.3375 (50-DMA) and 1.3420 (Dec. 17, 2018, high). On the downside, supports are located at 1.3225 (Jan. 15 low), 1.3180 (Jan. 11 low) and 1.3125 (Nov. 16, 2018, low).

EUR/GBP Daily chart

  • EUR/GBP is trading in a sideways trend and testing the 200-day simple moving averages (SMAs). 
  • At 19.00 GMT, investors must be cautious as Conservative Party lawmakers will vote for or against PM Theresa May amid growing discontent on the Brexit deal.
  • As forecast, the 0.8840 bear target has been reached.

EUR/GBP 4-four chart

  • EUR/GBP is trading below its main SMAs. 

EUR/GBP 30-minute chart

  • EUR/GBP bears must break below the 0.8840 level to reach 0.8800 figure.
  • On the flip side, bulls will target 0.8920 and 0.8970 levels as buyers have a slight advantage. 
  • Caution is advised as Brexit-related news can lead to high volatility on GBP pairs.

Additional key levels 

EUR/GBP

Overview:
    Today Last Price: 0.8861
    Today Daily change: 2.0 pips
    Today Daily change %: 0.0226%
    Today Daily Open: 0.8859
Trends:
    Previous Daily SMA20: 0.8987
    Previous Daily SMA50: 0.8924
    Previous Daily SMA100: 0.8898
    Previous Daily SMA200: 0.8864
Levels:
    Previous Daily High: 0.8988
    Previous Daily Low: 0.8854
    Previous Weekly High: 0.9062
    Previous Weekly Low: 0.8923
    Previous Monthly High: 0.9089
    Previous Monthly Low: 0.8863
    Previous Daily Fibonacci 38.2%: 0.8905
    Previous Daily Fibonacci 61.8%: 0.8937
    Previous Daily Pivot Point S1: 0.8813
    Previous Daily Pivot Point S2: 0.8766
    Previous Daily Pivot Point S3: 0.8679
    Previous Daily Pivot Point R1: 0.8947
    Previous Daily Pivot Point R2: 0.9034
    Previous Daily Pivot Point R3: 0.9081

 

   •  Bulls shrug off China’s signal of economic stimulus to counter slowing growth.
   •  A modest pickup in the USD demand prompts some long-unwinding trade.

The NZD/USD pair remained heavily offered through the mid-European session, albeit now seems to have found some support ahead of mid-0.6700s.

Despite China's indications for further economic stimulus to counter slowing economic growth, the pair stalled its recent positive momentum from over two-month lows and was now seen extending overnight retracement slide from near four-week tops, around mid-0.6800s. 

Supportive comments from China were largely offset by the US Trade Representative Robert Lighthizer's remarks that he did not see any progress made on structural issues during the US-China trade talks last week and thus, failed to provide any meaningful impetus.

This coupled with a modest US Dollar uptick, backed by a goodish pickup in the US Treasury bond yields, prompted some long-unwinding trade, which coupled with the prevalent cautious mood further collaborated to the pair’s slide to a one-week low level of 0.6755. 

In absence of any major market moving economic releases from the US, the USD price dynamics might continue to act as an exclusive driver of the pair's momentum through Wednesday's trading session.

Technical levels to watch

A follow-through weakness below mid-0.6700s could further get extended towards the 0.6720 intermediate support en-route the 0.6700 round figure mark. On the flip side, the 0.6800 handle, closely followed by the 0.6815-20 region now seems to act as immediate levels, above which the pair is likely to head back towards challenging the 0.6850 supply zone.

NZD/USD

Overview:
    Today Last Price: 0.6771
    Today Daily change: -46 pips
    Today Daily change %: -0.675%
    Today Daily Open: 0.6817
Trends:
    Previous Daily SMA20: 0.6746
    Previous Daily SMA50: 0.6796
    Previous Daily SMA100: 0.6685
    Previous Daily SMA200: 0.6792
Levels:
    Previous Daily High: 0.685
    Previous Daily Low: 0.6799
    Previous Weekly High: 0.6845
    Previous Weekly Low: 0.6707
    Previous Monthly High: 0.697
    Previous Monthly Low: 0.6686
    Previous Daily Fibonacci 38.2%: 0.6818
    Previous Daily Fibonacci 61.8%: 0.6831
    Previous Daily Pivot Point S1: 0.6794
    Previous Daily Pivot Point S2: 0.6771
    Previous Daily Pivot Point S3: 0.6743
    Previous Daily Pivot Point R1: 0.6845
    Previous Daily Pivot Point R2: 0.6873
    Previous Daily Pivot Point R3: 0.6896


 

GBP/USD Daily chart

  • GBP/USD is trading in a bear trend below the 100 and 200 simple moving averages (SMAs). 
  • At 19.00 GMT, traders must be cautious as Conservative Party lawmakers will vote for or against PM Theresa May amid growing discontent on the Brexit deal.

GBP/USD 4-four chart

  • GBP/USD is trading above its main SMAs.

GBP/USD 30-minute chart

  • GBP/USD is trading sideways with no clear direction. 
  • Bears have a small advantage with 1.2820 and 1.2780 as potential targets, but Brexit-related news will keep the GBP very volatile.

Additional key levels 

GBP/USD

Overview:
    Today Last Price: 1.2852
    Today Daily change: -32 pips
    Today Daily change %: -0.248%
    Today Daily Open: 1.2884
Trends:
    Previous Daily SMA20: 1.2721
    Previous Daily SMA50: 1.2759
    Previous Daily SMA100: 1.2894
    Previous Daily SMA200: 1.3112
Levels:
    Previous Daily High: 1.2917
    Previous Daily Low: 1.2668
    Previous Weekly High: 1.2866
    Previous Weekly Low: 1.2704
    Previous Monthly High: 1.284
    Previous Monthly Low: 1.2477
    Previous Daily Fibonacci 38.2%: 1.2822
    Previous Daily Fibonacci 61.8%: 1.2763
    Previous Daily Pivot Point S1: 1.2729
    Previous Daily Pivot Point S2: 1.2574
    Previous Daily Pivot Point S3: 1.248
    Previous Daily Pivot Point R1: 1.2978
    Previous Daily Pivot Point R2: 1.3072
    Previous Daily Pivot Point R3: 1.3227

 

Analysts at TD Securities suggest that they are downplaying today's no confidence vote in the UK on PM May’s leadership as she is likely to survive.

Key Quotes

“Political overtures by the PM to rival parties in the aftermath of defeat suggest that a soft Brexit may be in the offing. This should ultimately bode well for GBP in the medium-term. For now, spot conditions should remain choppy in the days ahead within a 1.2800/2930 range. Vol markets should be pressured lower as well.”

Krishen Rangasamy, analyst at National Bank Financial, points out that the Eurozone witnessed its worst semester in five years with real GDP growth likely coming in at less than 1% annualized in the second half of 2018, the weakest since 2013.

Key Quotes

“While 2018Q4 GDP results are not yet available, odds are they won’t be pretty in light of latest data from Germany’s Federal Statistics Office ─ the 1.5% growth print for 2018 points to a soft Q4 for the zone’s largest economy ─, and disruptions to France’s economic activity last quarter due to “yellow vest” protests.”

“The zone’s industrial production seems to have contracted on a year-on-year basis in the final quarter of 2018. The last two times this happened (2008 and 2012), the common currency area eventually fell into recession. Does this latest blotch of red ink on industrial output mean the Eurozone is headed for yet another recession?”

“That possibility cannot be ruled out especially if the deceleration of global trade extends into 2019, social unrest in places such as France and Italy gather momentum and/or Brexit spirals into something worse. But if those can be avoided, the zone has potential to bounce back.”

British Prime Minister Theresa May is speaking in the House of Commons ahead of tonight's critical no confidence vote. Below are some key quotes.

  • The House spoke clearly last night.
  • Government will retain the confidence of this House.
  • We do not even know what position the Labour party would take regarding Brexit.
  • Opposition would vote against the government's Brexit deal regardless of how good/bad it is.

British Prime Minister Theresa May is speaking in the House of Commons ahead of tonight's critical no confidence vote. Below are some key quotes.

  • A general election is simply not in the interest of our nation.
  • It would deepen division when we need unity.
  • It would bring delay when we need to move forward. 
  • There is no indication that a general election could bring the majority to move forward.

"U.S. import prices declined 1.0 percent in December, after decreasing 1.9 percent in November and rising 0.5 percent in October," the U.S. Bureau of Labor Statistics reported on Wednesday.

Key takeaways from the press release

  • The November drop was the largest monthly decline since the index fell 3.2 percent  in January 2015.
  • Prices for imports decreased 0.6 percent in 2018 following a 3.2-percent increase the previous year.
  • Prices for import fuel declined 9.2 percent in December, after a 13.3-percent drop the previous month.
  • Export prices fell 0.6 percent in December following a 0.8-percent decrease in November. 
  • Despite the December downturn, U.S. export prices increased 1.1 percent in 2018. 

SVS SECURITIES PLC è autorizzata e regolamentata dalla Financial Conduct Authority (Reg.220929) ed è membro del London Stock Exchange.
© 2019 SVS Securities - Tutti i diritti riservati.

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