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Weekly Review 03.4.17- 07.4.17

GBP/USD

GBP/USD has weakened this week, the pair closed at 1.2369. UK macroeconomic data released last Friday were below the expectations -  manufacturing production fell by 0.1% monthly basis, while industrial production fell by 0.7% in the month (expectations : 0.2% advance). The deficit on trade in goods and services widened to £3.7 billion in February from a revised deficit of £3.0 billion in January. The economy in UK grew by 0.5% in first three months, indicating that the economy lost momentum by the end of the first quarter. Before two weeks the UK formally triggered the Brexit through a letter to the EU, news that the Scottish Parliament backed FM minister Sturgeon desire to trigger a second independence referendum also has bad influence on the pound.

 USD advanced this week against most of its major rivals, with the exception of the Japanese yen (even despite the release of a soft US employment report). The US economy added 98,000 new jobs in March, marking the smallest gain in almost a year. According to some analysts this is a disappointing jobs report coming in well below consensus (This is not my opinion, the unemployment rate fell to 4.5% from 4.7%—the lowest level in almost 10 years). Geopolitical risks are in the center for traders (terrorist attacks in Russia and Sweden and the U.S.' airstrikes in Syria). The military action late Thursday put investors on edge on a day already loaded with market-sensitive events, including President Trump and his Chinese counterpart Xi Jinping’s closely followed diplomatic talks at Trump’s Mar-a-Lago resort in Florida.

 

Technical analysis

When we look at the monthly chart of this pair ( 12 years period) we can see strong " bearish" correction. On this monthly chart I marked resistance levels, 1.7000, 1.4300, 1.4000 are long - term resistance levels, 1.3000 also represents strong resistance level. As long the price is below 1.4000 resistance level there is no indication of long trend reversal and this pair is in the "sell" zone ( there could be a short term jump but strong "BUY" signal would be if the price jumps above 1.4000 level).

 

On this weekly chart (1 candle is one week period) we can also see that major trend is "bearish", price has dropped from 1.7000 level to 1.1946 level ( this level represents now strong support). On this chart I marked support and resistance levels - 1.2750,1.3000 and 1.3500 represent resistance levels, 1.2000 and 1.1946 represent strong support levels. On this chart I marked trend line and as long the price is below this line there is no indication of trend reversal (The pair is trading below 1.3000 and the bearish momentum remains lively). Breaking above 1.2600 would open way to 1.2750, breaking below 1.2200 would open way to 1.2000 (breakout of 1.2300 exposes 1.2200 region)

 

EUR/USD

The EUR/USD broke below the 1.0600 level and closed the week at 1.0589 level.  USD advanced this week against most of its major rivals, with the exception of the Japanese yen (even despite the release of a soft US employment report). The US economy added 98,000 new jobs in March, marking the smallest gain in almost a year. According to some analysts this is a disappointing jobs report coming in well below consensus (This is not my opinion, the unemployment rate fell to 4.5% from 4.7%—the lowest level in almost 10 years).

The release of worse-than-expected EU preliminary inflation for March weighed on the EUR. EU preliminary March inflation released last Friday confirmed the ECB's case for further stimulus, as the core yearly inflation shrunk to 0.7% after holding steady at 0.9% for a couple of months. ECB president Draghi said that there is no longer risks of deflation, but he also added that the ongoing easing program will remain in place, and that rates could go further lower if needed, trying to prevent the EUR to appreciate further.

Geopolitical risks are in the center for traders (terrorist attacks in Russia and Sweden and the U.S.' airstrikes in Syria). The military action late Thursday put investors on edge on a day already loaded with market-sensitive events, including President Trump and his Chinese counterpart Xi Jinping’s closely followed diplomatic talks at Trump’s Mar-a-Lago resort in Florida.

 

Tehnical analysis

When we look at the monthly chart of this pair we see that long trend is bearish (downtrend).  As long the price is below this trend line there is no indication of long trend reversal and EURUSD is in the sell zone(Big Investors are still in the short – SELL position on this pair). On this monthly chart I also marked support and resistance levels, 1.1500 (resistance) and 1.0500 (support) levels represent current trading range and breaking above/below this levels would open way to 1.2250 (resistance 2) or 1.000 ( psychological support).

 

If the price breaks 1.085 we have open way to 1.10 level. Most analysts agree that as long as below the critical 1.15 level , the risk will remain towards the downside. If the price breaks 1.055 support we have open way to 1.034 level and after that 1.01 level.

 

Oil - price rose on concerns about potential disruption to supply

Oil prices ended up falling back from the initial gains churned up after the U.S. air strikes against Syria, but are still at their highest level in a month. Military action in the Middle East, which accounts for around 40% of global oil production, always carries the risk of pushing up oil prices ( jump in oil prices reflected worries the conflict cold spread to major producers nearby). Crude stockpiles are starting to decline in a sign that the production cuts implemented this year are bringing the market to balance, according to OPEC's Secretary-General Mohammad Barkindo. Exports in March from the Organization of Petroleum Exporting Countries dropped by 1.18 million barrels a day from the previous month to 24.4 million. Oil rose after Kuwaiti comments bolstered optimism that OPEC and its partners will extend output curbs. A joint committee of ministers from OPEC and non-OPEC oil producers meeting in Kuwait has agreed to evaluate whether a global pact to limit supplies should be extended by six months.

The number of U.S. active drilling rigs rose for the 12th straight week, adding another 15 rigs to 839 following last week's increase of 15, according to the latest Baker Hughes survey. Positive news are that Goldman stays bullish on oil ( analysts see WTI crude rising to $57.50 per barrel by mid-year). Most analysts are expecting an increase in oil price for the first half of 2017 (a slow but steady rising of prices). In the second half of 2017, analysts are expecting the price to continue to grow at a similar rate (they also expect continued growth in Oil demand). Going forward, the Oil Production cuts and inventory and production levels will ultimately drive the market.

 

Technical analysis

Holding above 50 usd support level (psychological level) is important to achieve the waited targets, this supports the continuation of bullish trend overview efficiently for the upcoming period, and the way is open the achieve more gains that its next target located at 55 usd ( 60 - 62 usd is very strong resistance level). If the price jumps above 60 usd resistance level, 70 usd could be the next target. If the price falls below 40 usd it would be a strong "SELL" signal but for now this is not a possible scenario.

Indices

Dow Jones Industrial Average

U.S. stocks closed fractionally lower Friday, posting weekly losses as investors digested weaker-than-expected March jobs data and President Donald Trump’s late Thursday airstrike against Syria. The Dow Jones Industrial Average DJIA finished down 6.85 points at 20,656.10. The S&P 500 SPX declined 1.95 points to close at 2,355.54. The Nasdaq Composite Index COMP declined 1.14 points at 5,877.81.

When we look at 5 year chart we see that Dow Jones Industrial Average is moving in "uptrend". As long DJIA is above this trend line and 20,000 points this index is in the "BUY" zone ( 20,000 and 19,000 represent support levels). Short term support and resistance levels are 20,500 and 21,000/21,500 points - If DJIA jumps above 21,500 points that would be a confirmation of "BULLISH" trend. If DJIA falls below 19,000 points it would be strong "SELL" signal and than we have open way to 18,000 level support. Stocks remain expensive, but index inflows keep supporting the market, and for now there is no sign of a major dip emerging any time soon.

 

FTSE 100 Index GBP - Brexit woes remain in the center

U.K. stocks finished higher Friday, as oil and defense shares advanced after the U.S. military carried out airstrikes against Syria in response to a deadly chemical weapons attack ( stocks also got a lift from a drop in the pound). The FTSE 100 UKX ended up 0.6% at 7,349.37 in Friday and turned higher for the week, rising 0.4%. UK macroeconomic data released last Friday were below the expectations -  manufacturing production fell by 0.1% monthly basis, while industrial production fell by 0.7% in the month (expectations : 0.2% advance). The deficit on trade in goods and services widened to £3.7 billion in February from a revised deficit of £3.0 billion in January. The economy in UK grew by 0.5% in first three months, indicating that the economy lost momentum by the end of the first quarter.

When we look at 2 year chart we see that FTSE 100 Index is moving in "uptrend". As long FTSE 100 is above this trend line and 6,700 points this index is in the "BUY" zone ( 6,700 and 7,000 represent support levels). Short term support and resistance levels are 7,200 and 7,500 points - If FTSE 100 jumps above 7,500 points that would be a confirmation of "BULLISH" trend and open way to 8,000. If FTSE falls below 6,700 points it would be strong "SELL" signal and than we have open way to 6,400 level support.

 

 

 

 

 

 

 

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