EURUSD bounces after support at lows holds. MA above stalls rally

200 hour moving average stalls the rally

Late yesterday in a post, I wrote on the EURUSD:

If the sellers are to take more control, they have to get below the swing area below between 1.1713-207.  Last week (on Monday), the price fell below the low of that area and below the 200 hour MA (at the time), but quickly failed.  Getting below it should open the downside for more selling momentum. 

EURUSD on the hourly chart

The price in the Asian/early European session reached down to 1.17212 - at the top end of that range - but could not go any further. Sellers turned to buyers. The price moved higher. 

The run to the upside reached up to the 200 hour MA (green line at 1.18031 - the high reached 1.18038). The 100 hour MA is also a bias/risk defining level at 1.1814. The 100 and 200 hour MAs area near each other and going sideways indicative of an up and down market. 

Indeed, at the highs (between 1.1904 to 1.1915) there are four separate highs near each other, and on the downside (call it 1.1713-30), there are a number of swing levels near each other going back to July 28th.  IN between, by the 100 and 200 hour MAs is another swing area (see blue numbered circles).  Ups and downs with the middle area swinging the bias around. 




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Dollar keeps weaker on the session as risk rally extends

EUR/USD climbs back towards the 1.1800 level

EUR/USD H1 11-08

There's not much reprieve for the dollar in European morning trade today as the risk rally is pinning the greenback lower currently. European indices are pushing gains of over 2% while US futures are also higher by ~0.7% and that is keeping risk sentiment buoyed.

Elsewhere, 10-year Treasury yields are up by 2.3 bps to 0.599% and that is also helping with the risk mood and keeping the Japanese yen lower on the session.

For EUR/USD, price action is approaching 1.1800 again and nears a test of its 200-hour MA (blue line) @ 1.1804 with the 100-hour MA (red line) not far away @ 1.1815.

Keep below those levels and sellers will still stay in the game but move back above that near-term region and buyers will start to resume more control in the pair.

Elsewhere, cable is also now looking to try and keep above the 1.3100 handle:

GBP/USD H1 11-08

The 100-hour MA (red line) @ 1.3101 is also a key spot to watch as that helped to limit gains in trading yesterday, putting the focus back around the 200-hour MA (blue line) @ 1.3090 currently. Those will be key near-term levels to watch in the session ahead.

For cable, a breach above the key near-term levels above will pave the way for another potential test of the recent highs @ 1.3170-86.



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USD/CAD keeps lower to start the week but key near-term levels still at play

USD/CAD drop today defended by the 100-hour moving average again

USD/CAD H1 11-08

The pair is keeping lower after the drop yesterday saw price action break back below its 200-hour MA (blue line). Sellers defended that level in early trades today before moving on to retest the 100-hour MA (red line) around 1.3225 earlier.

For now, buyers are hanging on to that level as well as minor support seen from Friday @ 1.3225-26. However, the 100-hour MA is the key near-term level to watch now.

Break below that and sellers will establish a more bearish near-term bias in search for a more extended fall towards 1.3300.

In the bigger picture of things, the dollar side of the equation is still the key spot to watch amid the market focus on US stimulus in general.

But oil prices are continuing to keep more steady amid the more positive risk mood to start the session and that bodes well for the loonie so far at least.

For now, it is still all about the push and pull between key near-term levels pointed out above but given the dollar's vulnerability, a break under the 100-hour MA could set off another run towards last week's lows at 1.3234-45 potentially.

That said, it is going to be tricky to figure out how the market is going to react to Trump's executive order on unemployment benefits and how stimulus negotiations in Congress are taking shape this week.



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Gold correction deepens in fall below $2,000

Gold falls by 1.7% and back below the $2,000 mark

Gold W1 11-08

The correction in gold and silver continues to start the week as we see the former fall by 1.7% in a drop to $1,991 while the latter is seeing a drop by more than 4% and under $28.

There has been a strong sense that gold is one that has moved too far, too fast - even when tracking above $1,900 initially. But the resilience over the past two weeks has been astounding, though we are starting to see signs of exhaustion finally catch up.

As mentioned before, given how gold has behaved recently and how much it has been hyped up as a consensus trade as of late, any correction or pullback can be rather violent.

This ~1% drop perhaps isn't much for now but it could lead to a sharper fall in the coming sessions, especially now that sellers are seizing back near-term control:

Gold H1 11-08

The 200-hour MA (blue line) @ $2,007.04 will be a key spot to watch but psychologically, closing back under $2,000 will be a real blow to gold bulls for the time being.

The long-term prospects for gold remain as brilliant as ever, but patience is the key when it comes to this trade. For now, the exuberance and hype has gone a little overboard but one can expect dip buyers on any sharper pullback closer towards $1,900.



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Dollar Index capped by 1hr descending trend line for now.

Expecting USD strength to follow through

An oversold USD maybe due a correction (and Friday's USD lift can continue today) . This trend line is the perfect pivot point area for that intraday as posted earlier. 

Descending trend line capping DXY for now. 

Expecting USD strength to follow through




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Core 10 year bond yields remaining supported post NFP bounce.

Bond yields higher from Friday

Friday's slight recovery in major bond yields remain the case. This has helped pull gold lower as real yields drop too. I'll do a post on that later on the session. For now here are the yields:   

Bond yields higher from Friday



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The EURUSD runs away (and down) from the 200 hour MA/swing area today

Moves toward a cluster of swing levels on the downside

On Friday, the EURUSD fell below its 200 hour moving average and stay below that level. Recall from earlier in the week on Monday and Tuesday there were breaks below the moving average but those two breaks failed. Friday was different, and the price close below the moving average level (closing level was 1.1785).

Moves toward a cluster of swing levels on the downside

In trading today the Asian session vs. all the price move up to retest that 200 hour moving average. At the same time it was testing a swing area defined by previous highs and lows going back to July 29 (see red numbered circles). The price stay below that moving average and swing area. The Asian buyers turned to sellers and the price has continued lower in the European session.

The low price today has stalled near a another swing area. In fact there are 4 separate swing areas that are clustered between 1.17398 down to 1.16951. The 1.17398 is the closest of course and the low price today stalled just ahead of that at 1.17399. The price has bounced off that level and currently trades around 1.1764.

The close from Friday came in at 1.1785. If the price were to extend back above the closing level in turn positive on the day, that would likely tip the intraday bias a little more to the upside with the 200 hour moving average at 1.18044 the next obvious key target.

Should the price reversed back lower, getting below the swing levels at 1.17398, 1.17298, 1.1719 and 1.16951 would be the steps lower.



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EURUSD holds support and bounces after jobs report

200 hour moving average and swing level holds the support. Solidifies area as a key area

The EURUSD initially dipped on the better-than-expected jobs report (stronger USD) but has since given up those dollar gains and moved higher.

200 hour moving average and swing level holds the support. Solidifies area as a key area_

Technically, the low for the day reached 1.18008. A nice round number tobounce off of. It also was just ahead of its 200 hour moving average at 1.1798 and was near the swing area between 1.1801 and 1.18089 (see yellow area and red numbered circles). The 50% of the week's trading range is also in the area at 1.18051. 

Needless to say, the cluster of technical levels and the bounce off of it increases that areas importance.

The move higher has taken the price back above its 100 hour moving average. That moving average has seen the price action above and below over the last 4 trading hours as market participants awaited the jobs data. A move back below that level (currently at 1.18185) should tilt the intraday bias a little more to the downside with the key support area still in the way (down to 1.17986).  

On the topside, more upside momentum as a topside trend line at 1.1852 as the upside target. Get above that level would be more bullish in trading today.



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US dollar moves lower after US jobs report

Stocks recover some losses. Yields move modestly higher from modestly lower

The dollar was higher coming into the US jobs report. It remains higher on the day but is marginally lower since the better-than-expected released (go figure). 


  • EURUSD was trading at 1.1820. It is currently at 1.1836

  • GBPUSD was trading at 1.3077. It is currently trading at 1.3105

  • USDJPY was trading at 105.69. It is currently trading at 1 of 5.59

  • USDCHF was trading at 0.9140. It is currently trading at 0.9117

  • USDCAD was trading at 1.3348. It is currently trading at 1.3330

  • AUDUSD was trading at 0.7205. It is currently trading at 0.7216

  • NZDUSD was trading at 0.6644. It is currently trading at 0.6654


US stocks are still lower on the day. The Dow industrial average has cut some of its losses. Prior to the number the futures are implying a decline of -125 points. It is currently implying a decline of -66 points. The NASDAQ index was implying a decline of -31 points. It is now implying a greater fall of -43 points. The S&P index has improved by about 3 points and currently is trading -7 points on the day


Yields more modestly lower before the report. There now modestly higher/unchanged.


Gold was trading at $2049.21. It is currently trading at $2062.75. Silver was trading at $27.94. It currently trades at $28.70.



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US non-farm payrolls to set the tone ahead of the weekend?

The market is keeping a watchful eye ahead of the US jobs report later

Dollar

There is a lot of focus on the US non-farm payrolls later today, as market participants are in search of more clues on how the rise in coronavirus cases across the US is impacting the labour market. At this point, it feels like just about any suggestion will do.

Equities have largely held firmer throughout the week before encountering some jittery signs today, but that can still all change before the weekend.

As to why there is so much interest in the jobs report later, there are a few considerations.

Firstly, we have started to move off the fiscal cliff in the US as unemployment benefits have lapsed for over a week now. Adding to that, Congress is failing once again to reach a compromise for additional stimulus and that looks set to drag into next week.

That is arguably the key factor that is perhaps feeding some concerns to the market.

Then, there is also the fact that the virus situation continues to look bleaker in most countries after having seen the health crisis somewhat addressed since May to June.

Japan, Australia, and Hong Kong are among those which are making major headlines but the situation in the likes of India, Philippines, and Indonesia are arguably worse.

Adding to that is the recent rise in cases in Europe, with Germany posting a second straight day of new cases above the 1,000 mark - first time since early May.

And this is all before mentioning the situation in the US, which feels like the market has become desensitised by all the figures and updates over the past two months.

Even if the market becomes desensitised to all of this, virus fears are very real and they will play a role in limiting the global economic recovery and dampen consumption/spending - not forgetting that international borders are still closed at the moment.

That is all playing in the back of investors' minds surely but in the context of the near-term, all eyes will be glued on the US jobs report first and foremost today.

Seasonal adjustments may play a role and one would think that all of that should already be factored into the report later, but it's pretty much a guessing game for what the narrative will turn out to be once the numbers are released.

A good jobs report later - even if it may be due to muddy data - could be enough for the optimists to keep the calm ahead of the weekend. But I fear a relatively poor one has the potential to hurt risk sentiment a lot more than the market may be expecting.

I mean, US lawmakers are unlikely to get things settled today and continues to stay as a headwind and if there are signs that labour market conditions are declining further amid the rise in virus cases, there's little else but cheap money to boost hopes today.

US-China tensions are also mounting and that's another headwind for risk assets for now.

Then again, we've seen time and time again the power of cheap money. So, there's that.




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