Currency Highlights | December
13.12.2018
Stocks lifted by optimism over US-China trade.

CURRENCY HIGHLIGHTS – December 2018

 

EUR/USD

The EURUSD pair has been trading locked inside a wider price band since last week of October with price pattern in weekly chart forming a zig zag pattern as new and event driven momentum saw both sides of pair play tug of war for control. On the upside the pair faces two levels of resistance at 1.1499 & 1.1423 while the downside sees strong support at 1.1295 & 1.1210 respectively.

The month opened positive for Euro well above 1.14 handle but by the end of first week the pair lost all its early gains and was back to neutral level. The gains was Euro in first week was mostly due to cautious investor stance across globe as US election was under progress which saw divided outcome much in line with market expectations as Republicans kept the Senate and Democrats took the House.

However Dollar gained positive momentum immediately after US election as outcome had already been priced in market’s price action and FOMC update saw November interest rate remain unchanged while forward guidance was positive.

Euro also saw issues in form of Italian budget announcement which was rejected by the EU.EUR is expected to rise again after Brexit negotiation will show clear way of how Brexit will be implemented.

 

USD/JPY

Although USDJPY’s U-turn from 100-day SMA & support-line of short-term symmetrical triangle helped it cross 50-day SMA, the triangle-resistance, at 114.00, could challenge the pair’s strength. Given the buyers’ ability to surpass 114.00 barrier on a daily closing basis, the 114.55 and the 115.00 might entertain them before pleasing with 61.8% FE level of 115.30. On the contrary, 50-day SMA level of 113.00 and the 112.55 can offer immediate supports to the pair ahead of highlighting 112.35-30 support-confluence for one more time. If at all prices slid beneath 112.30, the 111.60, the 111.00 and the 110.65, comprising 200-day SMA, may flash on Bears’ radars to target.

 

GBP/USD

GBP/USD sees itself trading near the 1.2600 key level after seeing a brief relief rally on Wednesday, though gains were capped following Prime Minister Theresa May's confidence vote from within her own Tory party.

The recovery may continue until market players realize Brexit is a checkmate for the UK. Technically, the pair is trading below its daily high of 1.2671, also below a strong static resistance at 1.2660, the former yearly low that rejected sellers a couple of times in the last few weeks. In the 4 hours chart, the price is currently holding above a still bearish 20 SMA, with the 200 EMA gaining downward traction at around 1.2810. Technical indicators recovered from oversold readings but remain within negative ground, losing upward strength. There's a long way ahead before calling the pair bullish, as the pair would need to firm up above 1.2840, something quite unlikely without a clear Brexit path.

 

AUD/USD

AUD/USD rises to 0.7230 amid risk-on led by US-China trade optimism. AUD/USD found fresh bids near 0.7210 and jumped to 0.7231 highs, as the higher-yielding Aussie was boosted by the risk-on sentiment driven by rising expectations that a US-China trade deal will be reached soon. 

 

BITCOIN and ALTCOINS

In last month, cryptocurrency market saw a lot of red colour. SEC decision regarding Bitcoin ETF has been postponed again, which brings uncertain path for digital assets. However, market sentiment is bullish, as more and more people see benefits of digital decentalized currencies.

Majority of crypto traders are expecting negative trend to turnover and they suggest it is just a matter of time when next bullish run will occur.

Overall marekts conditions are relatively unchanged week-on-week with low turnover and slim trading ranges. We have talked before about the potential for a sharp break-out and still see this as a strong possibility going into the end of the year.