Forex Market Preview

Dean Forex Market Commentary – 16 December 2016

The dollar followed through from the Fed rate decision and most pairs got smashed yesterday. We are in uncharted territory in the EURUSD and it could be foolish to try and pick a bottom in this pair. Liquidity may dry up a little of the course of next week so the moves may be exaggerated.

Dean's Daily FX Update – 16 December 2016

 

In the Zone

  • We cover all the pairs in the video this morning.

Noteworthy News

  • Mexico raised its interest rates by 50bp last night, is this an indication that with US interest rates expecting to up next year emerging markets will be raising interest rates in anticipation of rising inflation.

Recap

The market was poised at vital support and resistance, we discussed yesterday that the London session was braced to continue with the USD momentum. Not in my wildest dreams did I imagine that the momentum would continue with such force, the Dollar truly is king at the moment as it makes considerable gains against all major pairs.

I am tempted to think that this is just a hangover and that we should get a correction fairly soon, my internal conflict comes in that there have been some technical breakouts that will keep the USD bid.

You would think that at some point the buyers would come into the EURUSD, but there really does seem to be “murder on the dance floor.” With the US clearly plotting a 2017 with more interest rate hikes, the EU are contemplating life with more QE packages – interest rate policy is clearly poised for some divergence. The entire market is aware of this and this has scared the buyers away, we highlighted the 1.0460 level as a big one, price traded through that level all the way to 1.0415 which makes this the lowest level in 14 years. We are now in unchartered territory with no historical support levels to consider, if we connect recent lows in the form of a trend line the next level comes in at 1.0300. The sellers are clearly in control here, my strategy is to sit this pair out – let somebody else pick the bottom.

The BOE kept rates unchanged today but they did indicate there could be some tightening soon. The break lower at 1.2493 was felt hard with stops been triggered and cable only finding some support again at 1.2380. Support did rally into the close and the level to watch today will be 1.2460, a close above this level into the weekend will be bullish for next week.

Sometimes the smallest of victories can mean so much, and this is what we can take away from the USDJPY. Key resistance at 118.50 held yesterday on more than one occasion – is this pair finally running out of steam? It is difficult to call a top in this pair at the moment but we are seeing some consolidation and I my gut says that traders are starting to pick 118.50 as the top. The sellers need to start looking for small victories at this point, a close below 118.06 will go a long way towards sellers gaining a foothold.

I was afraid for the NZDUSD yesterday morning and my fear was justified as the pair closed below the 200 day MA which is trading at 0.7064. This becomes a vital level at the end of the week, I would expect some support buyers to test that level again, but the Kiwi could be in some serious trouble next week if we close below 0.7064 this evening. I really did think that the Aussie was going to put up a more stubborn fight today – after all just before the FOMC, this pair was testing major resistance at 0.7500. Like most other pairs, there is a good battle at current support level and I believe that 0.7330 is the level to watch, a close below this level and we start next week with a bearish tone.

If we take our cue from the week post the US Election, the last dollar run, we need to be patient. The greenback will have to take a breather at some point and that will present some opportunity, be cautious though as we don’t want to underestimate the strength of the dollar right now. Don’t forget that next week the liquidity may start to dry up as traders prepare for the festive season.

Daily Ranges 16/12/2016

Majors

EURUSD

Resistance                                        1.0525 – 1.0558

Support                                             1.0410 – 1.0350

GBPUSD

Resistance                                        1.2515 – 1.2548

Support                                             1.2410 – 1.2380

AUDUSD

Resistance                                        0.7408 – 0.7450

Support                                             0.7340 – 0.7305

NZDUSD

Resistance                                        0.7100 – 0.7115

Support                                             0.7025 – 0.6980

USDCAD

Resistance                                        1.3360 – 1.3389

Support                                             1.3263 – 1.3219

USDJPY

Resistance                                        118.40 – 118.60

Support                                             117.20 – 117.05

USDCHF

Resistance                                        1.0321 – 1.0340

Support                                             1.0250 – 1.0212

Rand

USDZAR

Resistance                                        14.0800 – 14.1460

Support                                             13.8740 – 13.8140

EURZAR

Resistance                                        14.7212 – 14.7717

Support                                             14.4093 – 14.3280

GBPZAR

Resistance                                        17.5580 – 17.7050

Support                                             17.1485 – 17.0239

Minors

AUDCAD

Resistance                                        0.9868 – 0.9875

Support                                             0.9785 – 0.9750

AUDJPY

Resistance                                        86.90 – 87.40

Support                                             86.10 – 85.64

EURCHF

Resistance                                        1.0760 – 1.0792

Support                                             1.0720 – 1.0700

EURGBP

Resistance                                        0.8399 – 0.8410

Support                                             0.8356 – 0.8334

EURJPY

Resistance                                        122.92 – 123.40

Support                                             122.20 – 122.00

GBPJPY

Resistance                                        146.46 – 147.00

Support                                             145.19 – 144.77

GBPCAD

Resistance                                        1.6687 – 1.6710

Support                                             1.6522 – 1.6490

GBPCHF

Resistance                                        1.2845 – 1.2878

Support                                             1.2740 – 1.2707

CADCHF

Resistance                                        0.7740 – 0.7770

Support                                             0.7670 – 0.7645

Indices

DE30

Resistance                                        11390 – 11430

Support                                             11090 – 11005

UK100

Resistance                                        7010 – 7033

Support                                             6920 – 6900

US500

Resistance                                        2270 – 2300

Support                                             2230 – 2200

US30

Resistance                                        19950 – 20000

Support                                             19700 – 19500

SA40

Resistance                                        44500 – 44600

Support                                             43500 – 43000

Commodities

BRENT

Resistance                                        54.70 – 54.90

Support                                             53.00 – 52.50

XAUUSD

Resistance                                        1144.00 – 1149.11

Support                                             1122.14 – 1115.00

XAGUSD

Resistance                                        16.34 – 16.47

Support                                             15.94 – 15.83

Important Economic Data out today

  • 15:30                    USD                      Building Permits

 

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