The strengthening divergence in both monetary policy between the United States and Europe has encouraged sellers to continually harass the EURUSD, sending prices to fresh 7 month lows of 1.0592. Whilst Mario Draghi’s repetitive dovish rhetoric towards the Eurozone economy has consistently devalued the Euro, the intensifying expectations around the Fed raising US rates in December have sent the Dollar to seven-month highs.
This catalytic combination of Euro weakness and Dollar dominance has threatened bullish investors resulting in a heavily depressed EURUSD that shows no signs of a bounce back. There is an event risk for the Dollar on Tuesday with the release of the latest US Q3 GDP results, in which if estimates are exceeded then the Fed may be provided another strong reason to raise US rates in the December meeting.
Technically speaking the pair is bearish on the daily timeframe as there have been consistent lower lows and lower highs. Prices are trading below the 20 and 200 SMA, with the MACD crossing to the downside. The bearish engulfment on Friday may provide the foundation for prices to trade towards the 1.0500 support.
WTI Oil gyrated between gains and losses in Monday’s trading session following the unexpected announcement from Saudi Arabia’s cabinet announcing that it was ready to cooperate to achieve market stability. This commodity spiked nearly $2 as expectations were temporarily raised that the OPEC meeting scheduled for December may implement a solution to tackle the global glut of oil. Regardless, this short term optimism was short-lived as investors eventually uncovered that the statement about Saudi Arabia cooperating has been reiterated in the past. WTI Oil remains fundamentally bearish as the underlying theme of an excessive oversupply in the markets and sluggish demand for oil will continue to suppress prices.
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WTI may have entered a phase of consolidation on the daily timeframe with short term support based at $40 and resistance at $43.20. A breakdown below the psychological $40 may invite an opportunity for sellers to send prices towards $39.
Despite the positive European PMI releases yesterday sentiment still remains somewhat bearish towards the Euro and following Mario Draghi’s dovish stance towards the Eurozone economy last week, many are expecting the ECB to ease monetary policy before the end of the year. Later today the German IFO Business climate will be announced, and any additional signs of an economic deceleration around Europe may lead to further selling in the Euro.
CADJPY
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The CADJPY is in a phase of consolidation on the daily timeframe. Whilst the MACD trades to the upside, prices are below the daily 20 SMA. A breakout above the 93.00 resistance may be needed to offer an opportunity for buyers to send prices towards 94.00.
EURJPY
The EURJPY is technically bearish on the daily timeframe. Previous support at 131.00 may act as a dynamic resistance which may encourage sellers to send prices towards 129.00. Prices are trading below the daily 20 SMA and the MACD has crossed to the downside.
AUDNZD
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This pair is technically bullish on the daily timeframe. Prices are trading above the daily 20 and 200 SMA and the MACD has crossed to the upside. The next relevant level is based at 1.1100.
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