EUR/USD: dollar strength to extend

EUR/USD Current price: 1.2282

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The dollar is positioned to continue leading the forex board this month, as employment readings on Friday highlighted the divergence in economic growth with other major economies. For November the US added 312K new jobs, maintained its unemployment rate at 5.8%. This report completed the 10th consecutive month showing more than 200K new jobs, whilst brought hope on wage growth, finally accelerating. On a more negative note, labour force participation remained at levels last seen in the late 1970s. Monday begins soft on the data front, particularly because of a Christian holiday in many European countries, but the week is fulfilled with first line readings on both shores of the Atlantic that should keep markets active, before holiday moods and books’ closing ahead of the year end, left volumes to their minimum.

Technically the 1 hour chart shows price hovering near the fresh year low posted on Friday at 1.2270 and well below its moving averages that gain bearish slope below the 1.2400 mark. Indicators in the mentioned time frame turn lower near oversold levels with no aims to turn higher anytime soon. In the 4 hours chart 20 SMA maintains a strong bearish slope around 1.2330 and indicators hold in negative territory, albeit lacking directional strength at the time being. Weekly charts show a strong static resistance area between 1.2240/70 with multiple lows back to 2008/2010, and a break below it should signal further declines towards the 1.2000 critical figure.

Support levels: 1.2270 1.2240 1.2210

Resistance levels: 1.2330 1.2360 1.2400

EUR/JPY Current price: 149.36

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The EUR/JPY pair surged to levels not seen since October 2008, as yen weakness overlapped EUR’s one. The Japanese currency survived Moody’s downgrade to its sovereign credit earlier last week, and temporal gains were seen just as selling opportunities for investors. Yen weakness is being supported by upcoming elections in December 14 that point to give PM Abe the majority in the lower house required to keep implementing Abenomics, as long as the eye can see. Technically speaking, the 1 hour chart shows price holding well above its moving averages, whist indicators stand flat in positive territory, with RSI at 70. In the 4 hours chart however, technical readings present a strong upward momentum that supports a continued advance for the upcoming sessions, moreover if Japanese GDP figures disappoint today.

Support levels: 149.15 148.60 148.10

Resistance levels: 149.60 150.00 150.50

GBP/USD Current price: 1.5633

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The GBP/USD pair trades at its lowest levels since September 2013, with the December partial decline so far signaling the sixth month in a row to the downside. Whilst intraday trading has been choppy, mostly within range, it seems the pair has resumed its bearish trend after breaking below the triple floor set around 1.5580/90. During the upcoming days the UK will release industrial and manufacturing production data, trade balance and housing readings, all of them usually volatile: if data beats expectations, the Pound may see some short term demand yet at this point, bears will remain in control unless some steady recovery above the 1.5700 level. In the short term, the 1 hour chart shows indicators still heading lower despite near oversold readings, while 20 SMA presents a strong bearish slope above the current price, acting as dynamic resistance around 1.5630. In the 4 hours chart indicators maintain a strong bears, while 20 SMA gains bearish slope above the current price favoring the short term view.

Support levels: 1.5550 1.5520 1.5485

Resistance levels:  1.5580 1.5630 1.5665

USD/JPY Current price: 121.09

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Broader USD strength pushed the USD/JPY pair up to 121.67 on Friday, supported by a positive outlook for the world’s largest economy in contrast to still lagging Japan. A solid US employment report sparked a selloff in government bonds, pushing the yield on the two-year note to the highest level in more than three years and the ten-year note ones to 2.306%, the highest since November 24. Rising yields usually equal to rising USD/JPY. Technically, the 1 hour chart shows price gapping higher at the opening and pressuring mentioned 121.67 high, with momentum and RSI heading higher despite in overbought levels. In the 4 hours chart RSI stands at 85 whilst momentum turns slightly lower but holds well above its midline, both far from signaling an upcoming decline. Japan GDP readings will be released early Asian opening, and are expected to show Japan economy contracted less than initially estimated in the third quarter; if the reading misses expectations however, the USD/JPY may advance further on self yen weakness.

Support levels: 122.30 121.90 121.40

Resistance levels: 122.70 123.10 123.50

AUD/USD Current price: 0.8308

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The AUD/USD pair trades at its lowest level in over 4 years, weighted not only by greenbacks’ strength but also by increasing market’s belief the Reserve Bank of Australia will cut rates in 2015 amid an economy struggling for traction and tumbling export prices: as an example, the price of iron ore which accounts for 20% of Australia’s export income, has fallen nearly 50% since the beginning of the year; gold decline and consolidation near production cost, surely won’t help Australian mining sector. As for the AUD/USD pair, the 1 hour chart shows price struggling right above the 0.8300 mark, with 20 SMA heading lower well above current level and indicators heading also south near oversold levels. In the 4 hours chart both momentum and RSI extend their bearish momentum despite entering oversold territory, whilst 20 SMA offers dynamic resistance at 0.8380, pre NFP intraday highs.

Support levels:  0.8290 0.8255 0.8220

Resistance levels: 0.8330 0.8380 0.8415