Christmas came early for those who bought the USD after Mario Draghi dropped the bomb on the EUR. Yesterday, the ECB President hinted further easing to revive the struggling EU economy. Among those measures, was another deposit rate cut which was out of the question before this meeting. As a result, the market perceived this to be hugely EUR negative and sold the common currency to even 1.1070 lows overnight from 1.1340. The news also sent global equities higher, with DAX and CAC trading up +2%, same as Nikkei and Dow Jones. The dovish ECB stand sent commodity currencies such as AUD, CAD, and NZD surging versus USD, although commodities were quite steady with OIL and GOLD trading around 45.50 and 1170 respectively.
Today’s focus shifts to the EU and US PMI’s with special focus given on technical levels (support and resistances) for EURUSD. The pair has immediate support at 1.1075 and 1.1020 and resistance at 1.1185.
Trading Quote of the Day: “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. Believe me, it will be enough.” Mario Draghi
USDCAD
Pivot: 1.305
Likely scenario: Long positions above 1.305 with targets @ 1.316 & 1.322 in extension.
Alternative scenario: Below 1.305 look for further downside with 1.2985 & 1.293 as targets.
Comment: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
USDCHF
Pivot: 0.9645
Likely scenario: Long positions above 0.9645 with targets @ 0.974 & 0.9765 in extension.
Alternative scenario: Below 0.9645 look for further downside with 0.961 & 0.957 as targets.
Comment: Technically the RSI is above its neutrality area at 50.
OIL
Pivot: 46.1
Likely scenario: Short positions below 46.1 with targets @ 44.85 & 44.45 in extension.
Alternative scenario: Above 46.1 look for further upside with 46.4 & 46.95 as targets.
Comment: As long as 46.1 is resistance, likely decline to 44.85.
DAX
Pivot: 10280
Likely scenario: Long positions above 10280 with targets @ 10750 & 10820 in extension.
Alternative scenario: Below 10280 look for further downside with 10050 & 9885 as targets.
Comment: The RSI is bullish and calls for further upside.
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