The single currency was trading higher on Thursday, with the EURJPY cross gaining some bullish momentum after yesterday’s decline. The euro was 0.25% stronger during the London session, hovering around 131.80.
According to the data released earlier in the day, the German manufacturing PMI rose to 81 month highs of 62.5 in November, while services PMI rose to 54.9 from 54.7 booked previously. The Eurozone manufacturing PMI rose to the highest level in 211 months and scored 60.0 in November, whilst the services sector rose to 56.2, its highest in 6-months.
The euro rose around 0.20% after these positive numbers and EU stocks also erased their intraday losses, with German DAX jumping into positive territory.
Later in the day, the ECB monetary policy meeting accounts will be released, which might also spur some volatility.
The cross is now testing a very strong demand zone around 131.40/60, where previous lows and highs are converged, along with the 100 day moving average. If the cross holds this support, the bullish trend could still be intact. However if broken, the bullish momentum could falter and the next target would be at 130.00.
The resistance for today’s trading is seen at 132.00 and if bulls will be stronger, further advancement toward 132.40 might occur. In all cases we strongly recommend to have rigorous money and risk management.
The USDJPY pair slid again on Wednesday and was trading 0.35% lower during the London session, hovering near the 112.00 mark.
For the first time since November 2007, the spread between 2Y and 30Y Treasury yields has crashed below 100bps and the 30 yield is dropping at the fastest rate in at least a decade. Should this trend continue, the yield curve might be inverted soon, meaning short-term yields will be higher than the longer-term ones. This has happened only seven times in the previous 50 years and every time a recession followed.
The USDJPY pair is very sensitive to yield differential and plummeting bond yields are very negative for this pair, therefore the greenback remains under selling pressure.
The US calendar will bring durable goods orders, which are projected to weaken notably. The FOMC minutes from the last Fed meeting will also be released and might spur some volatility.
The USDJPY pair is dropping toward the key support around 111.70, where October lows are converged with the 100 and 200 day moving averages. If the dollar manages to hold this level, it may bounce toward 112.50. However, if bears will be stronger and the greenback drops below, the current bullish wave could end, meaning a possible decline toward 110.50. In all cases we strongly recommend to have rigorous money and risk management.
The Japanese Nikkei was trading 0.8% stronger on Tuesday and was hovering around 22,420 JPY during the London session.
Yesterday’s 80 pips ramp higher in the USDJPY pair helped to lift the US stocks and Nikkei opened with a large bullish gap on Tuesday and has managed to defend gains so far.
There are no major data on the agenda today, with markets focusing on the ongoing tax debate in the US. In addition, existing home sales will be released today and should increase slightly to 5.42 million annually from 5.39 million previously.
More data will come today, including durable goods orders and initial jobless claims. These numbers might spur some volatility on equity markets.
The index broke below the medium-term bullish trend line, which cancelled the immediate bullish trend. It ramped higher the other day to retest the trend line, but failed to get above and was sold-off.
Currently, the resistance is at 22,735 JPY, where the short term top has formed and if broken, further rise toward 23,000 JPY might occur. On the other hand, the support is at the key level near 22,000 JPY and bulls need to hold this to attack the previous cycle highs. In all cases we strongly recommend to have rigorous money and risk management.
The single currency was trading marginally lower during the London session on Monday and was seen around 1.1770, having erased all the overnight losses, when the EURUSD pair dropped to 1.1720 amid fresh political worries in Germany.
Over the weekend, Merkel’s efforts at forming a coalition have failed, meaning a second election is possible in the next year. After a 12-hour negotiating session that ended shortly before midnight Sunday, the Free Democratic Party walked out of the exploratory talks, saying the differences with the Green party were too great to bridge.
European stocks were down on the news as well, but losses seemed limited for now. German DAX briefly dipped below the psychological level of 13,000 and was testing last week’s lows.
Investors will also focus on today’s Mario Draghi speeches, which are due later in the day and might bring some elevated volatility as Draghi will speak about monetary policy.
The EURUSD pair tested the 100 day moving average at 1.1750 along with the strong demand zone slightly above 1.17 and both supports held, sending the pair higher. The next resistance is seen at 1.18 and if broken, further rise toward 1.1850 could occur.
On the other hand, should the pair decline below 1.1750, another test of the major support zone near 1.17 seems likely. In all cases we strongly recommend to have rigorous money and risk management.