Daily Forex Market Preview, 21/12/2016
Equity markets continued to push higher yesterday as risk appetite improved sending the Dow Jones Industrial Average to trade just a few points below the symbolic 20,000 level as the markets continue to maintain the bullish momentum albeit signs of stalling. The DJIA closed at 19974.62 which was an all time high for the leading stock index while the S&P500 and the Nasdaq gained 0.4% and 0.5% respectively. The yen gave up its two day gains inching back to the 118.00 handle while the euro fell to fresh lows of 1.0352.
EURUSD Intra-day Analysis
EURUSD (1.0410): EURUSD came under pressure yesterday as the greenback regained its bullish momentum. EURUSD lost 0.1% on the day on renewed selling, breaking below the previous lows putting the early long positions at risk. However, towards the end of the day, the single currency was seen pulling back from the lows to close at 1.0389. The single currency continues to remain under pressure to the downside as it attempts to clear the 1.0400 handle. A closure above this level could see the single currency attempt to rally back to 1.0500 - 1.0533 resistance level. A higher low is required to validate the potential move towards the first resistance zone of 1.0500 - 1.0533.
GBPUSD Intra-day Analysis
GBPUSD (1.2376): GBPUSD slipped below the 1.2400 handle yesterday after briefly posting a bounce off this support previously. The current retracement could challenge the 1.2400 handle which could turn to resistance. A reversal off 1.2400 could signal further downside in the British pound as the price could slide towards 1.2250 - 1.2224 support. Alternately, if price closes above 1.2400, the British pound could post significant gains which could see price retest the 1.2571 resistance level.
USDJPY Intra-day Analysis
USDJPY (117.55): While USDJPY rallied back to 118.00 yesterday failure to close above this level is currently leading to a weaker price action. The daily Stochastics has remained in the overbought levels for nearly a month and a half with support at 114.00 seen as the likely price level for the dollar to post a correction. On the 4-hour chart, USDJPY has bounced off the lower trend line of the price channel and following a lower high being formed; price action could be expected to push lower.