Euro climbs on dollar weakness

December 19, 2017 09:50 AM
Daily Wrap-up

Euro (March)

Session close: Settled at 1.18675, up 22.5 ticks

Fundamentals: The euro put in a decent session, trading higher on dollar weakness. This is a critical week for tax reform as a final bill is projected to hit the President’s desk by Christmas. However, the dollar lost some muster from the bull camp and this is right in line with our ‘buy the rumor sell the fact’ expectations on tax reform for the greenback. CPI data for the Eurozone was in line with expectations this morning, coming in at 1.5%. German business climate is due tomorrow morning at 3:00 am CT and Eurozone wages follows at 4:00. We will watch both reads closely. Building permits and housing starts are due in the U.S at 7:30 am CT. Neel Kashkari, the known Fed dissenter speaks tomorrow morning.

Technicals: Prices are running into a pretty thick net of resistance between 1.19 and 1.20. We remain long term bullish and the bottoming from today’s session could easily gather legs this week. Trend line resistance from the highs aligns with the 1.1998 level and comes just in front of 1.20435; a close out above these levels will ignite a bull leg higher. The nine-day moving average is trading below the 21-day but rounding out, and a trade above first resistance will spark this bullish momentum indicator. Line-in-the-sand major three-star support has held tremendously and comes in at 1.1797-1.1799; a move below here will damage the near and intermediate-term perspective for the euro.

Bias: Bullish

Resistance – 1.1891**, 1.1920-1.1931**, 1.1946-1.1949**, 1.1998**, 1.20435***, 1.2180-1.22135****

Support – 1.1797-1.1799***, 1.1742**, 1.16485***


Yen (March)

Session close: Settled at .89355, up 2.5 ticks.

Fundamentals: The yen put in a steady session after a very strong read on trade balance data. Despite the strong exports, the yen didn’t do much and traders are watching the U.S. dollar as they wait for the Bank of Japan’s (BoJ) policy meeting late Wednesday night. For weeks now, we have documented comments from BoJ Council members who fear the law of diminishing returns signaling their support for tightening policy or tapering purchases before the bank reaches its inflation goals. However, a BoJ Governor appeared to fade those rumblings earlier this month. For now, we wait until Wednesday.

Technicals: Price action has consolidated since the dollar began weakening on the heels of the Fed rate hike. For now, this consolidation has remained above the nine-day moving average but must move out above first resistance in order to build for a cross and spark bullish momentum. We remain long-term bullish and have been eyeing the last week of December and the first two weeks of January as a high probability setup fundamentally, while the technicals seem to be preparing for such as well.

Bias: Bullish

Resistance – .8957**, .8984**, .9060-.9091***, .9164**

Pivot - .8928-.89355

Support – .8916**, .88405**, .8782-.8808***

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About the Author

Bill Baruch is President and founder of Blue Line Futures, a leading futures and commodities brokerage firm. Bill has more than a decade of trading experience and focuses on developing trading strategies for both long and short-term trading approaches. Prior to Blue Line, Bill was the Chief Market Strategist at iiTRADER.  Bill is a featured expert on CNBC, Bloomberg and the Wall Street Journal as well as other top tier publications.