Profit Taking Halts Rally

U.S. Dollar Trading (USD) stocks rallied in Europe but some weak US housing data prompting a reversal in the New York session on profit taking across the markets. December New Home Sales fell -2.2% vs. a 2.3% forecast. The weekly jobless claims came in near forecasts at 377k vs. 370k expected. In US stocks, DJIA -22 points closing at 12734, S&P -7 points closing at 1318 and NASDAQ -13 points closing at 2805.  Looking ahead, Q4 GDP forecast at 3% vs. 1.8% previously. January Consumer Sentiment forecast at 74.1 vs. 74 previously.

The Euro (EUR) the EUR/USD moved to the 1.3180 resistance level in Europe overnight buoyed higher by reports of some progress in the Greece debt deal negotiations and the large rally in US stocks the post FOMC meeting. Profit taking hit during the US session and the major retreated back to 1.3100 support. Looking ahead, ECB President Draghi speaks.

The Japanese Yen (JPY) the USD/JPY continued to retreat in the risk off environment overnight with Y77.50 support giving way and the major sliding to Y77.30. EUR/JPY topped out above Y102 before falling back under Y101.50. AUD/JPY performed well in Europe with the market moving to Y82.75 highs before finding support at Y82 in Asia this morning. UPDATE January CPI at -0.4% vs. -0.3%.

The Sterling (GBP) Cable enjoyed new highs above 1.5700 but came under pressure after weaker than expected December CBI Retail Sales data showed a slump to -22 vs. +6 in previously. The weakness in the consumer outlook is making the UK recovery outlook more uncertain going forward. EUR/GBP rallied to month highs on the weak data but reversed with the EUR/USD back to 0.8350 support.

Australian Dollar (AUD) the AUD/USD made an attempt at the 1.0700 key resistance before reversing back to lower 1.0600 region in the US session. The Asia session was very quiet with the Chinese markets still away on New Year holidays and the Australian market closed for Australia Day celebrations. Support is seen at 1.0580 previous resistance.

Oil & Gold (XAU) Gold dipped towards $1700 before rallying to $1730 fresh highs in the US session. Oil broke above $100 but a sharp rally to $101 was reversed back below $100 by the end of the trading session.

Pairs to watch

EUR/USD the Relief rally over?

USD/JPY Back to downtrend?

TECHNICAL COMMENTARY

Euro – 1.3105                             

Initial support at 1.3090 (Jan 26 low) followed by 1.2931 (Jan 25 low). Initial resistance is now located at 1.3197 (Dec 21 high) followed by 1.3386 (Dec 12 high)

Yen – 77.15

Initial support is located at 76.58 (Nov 18 low) followed by 76.00 (Big Figure). Initial resistance is now at 78.29 (Nov 29 high) followed by 78.98 (Nov 1 high).

Pound – 1.5675                                                                             

Initial support at 1.5517 (Jan 23 low) followed by 1.5416 (Jan 19). Initial resistance is now at 1.5728 (Dec 22 high) followed by 1.5800 (Big Figure Resistance).

Australian Dollar – 1.0620

Initial support at 1.0573 (Jan 23 high) followed by the 1.0428 (Jan 4 low). Initial resistance is now at 1.0765 (Sept 1 high) followed by 1.1007 (Aug 2 high).

Gold – 1722

Initial support at 1700 (Big figure resistance) followed by 1681 (Jan 23 high). Initial resistance is now at 1724 (Dec 9 high) followed by 1750 (Big level resistance).

Oil – 99.90

Initial support at 99.70 (Intraday Support) followed by 98.50 (Intraday Support). Initial resistance is now at 101.00 (Intraday resistance) followed by 103.00 (Intraday Resistance).

Written by Anthony Darvall