U.S. financials drive currencies' Christmas

December 22, 2017 08:38 AM

Euro (March)

Session close: Lost about 10 ticks on the session

Fundamentals: U.S. final Q3 GDP cooled from early estimates and Jobless Claims missed. On the other side of the coin, Philly Fed Manufacturing, House Price Index and Corporate Profits data came in better. Today though has nothing on tomorrow’s windfall of data and this ultimately opened the door for a consolidation session for the euro after a strong week thus far. German Import Price Index and Consumer Climate is due at 1:00 am CT. The main reads are out of the U.S. with PCE, Durable Goods and Personal Income and Spending due at 7:30 am CT. Michigan Consumer data and New Home Sales are due at 9:00. With a strong concentration on the early reads, tomorrow’s U.S. data will heavily dictate how the currency market as a whole heads into the Christmas holiday.

Technicals: Trend line resistance held strong and encouraged profit taking from the bull camp ahead of tomorrow’s data. This level comes in at 1.1975 tomorrow and will align with 1.1998 resistance to create a breakout level that must be achieved. Still, major three-star resistance comes in at recent highs and a close above here is needed to confirm the breakout. Price action has settled right in at the pivot today. Support below here comes in at 1.1903-1.1913 and this includes the 100-day moving average. We remain bullish and dips to this level in the wake of U.S. data tomorrow that is not considered robust should present a strong intermediate-term buy opportunity.

Bias: Bullish

Resistance – 1.1998**, 1.20435***, 1.2180-1.22135****

Pivot - 1.1946-1.1949

Support – 1.1903-1.1913**, 1.1885**, 1.1854*, 1.1797-1.1799***, 1.1742**, 1.16485***


Yen (March)

Session close: Gained about 10 ticks on the session

Fundamentals: The Bank of Japan left policy unchanged late last night on an 8-1 vote. This did not surprise the market and the bank commented that the economy is growing moderately, and inflation is rising well below its target. The BoJ will be a wildcard in 2018 and we still believe one that can and should surprise the market. We remain long-term bullish the yen at these levels and while everyone is selling.

Technicals: Price action Pac-Manned (ran stops and reversed) key trend line support at .8855 with a session low of .8847. The market has seemingly stabilized but a hold through tonight is still needed to declare such. Regardless, a gauntlet of U.S. data ahead of the weekend will control tomorrow’s session and a close back above .8897-.8912 is needed to neutralize this weakness.

Bias: Bullish/Neutral

Resistance – .8897-.8912**, .8937-.8957**, .8984**, .9060-.9091***, .9164**

Support – .8855**, .8840**, .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.