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market review 02 December 20

02 December 20

Dollar licks its wounds as Biden cools on China, vaccine, stimulus and data eyed

The US dollar is marginally bouncing as President-elect Joe Biden wants to keep tariffs on China unchanged at first. The UK’s approval of a coronavirus vaccine helps sustain an upbeat mood. ADP’s jobs figures, Fed Chair Powell’s testimony, fiscal stimulus, and Brexit are all eyed.

Sino-American relations: President-elect Joe Biden told the New York Times that he will first conduct a full review and consult allies before removing any tariffs on China. These headlines somewhat weighed on the market mood and allowed the dollar to stabilize.

EUR/USD rallied on Tuesday, hitting the highest since May 2018. The mix of political certainty, a divergence in reactions to monetary stimulus, and vaccine hopes triggered the breakout.

The US ISM Manufacturing Purchasing Managers’ Index marginally missed expectations with 57.5 points while the employment component dropped below 50, indicating contraction. The ADP jobs report is due out on Wednesday and provides another clue toward Friday’s Nonfarm Payrolls.

Brexit talks continue in full force but the EU denies they have “entered a tunnel” – a term that refers to off-the-radar intense talks are en route to an accord. GBP/USD jumped above 1.34 in hopes for a breakthrough and is holding above that level.

AUD/USD is trading closer to 0.74 amid US dollar weakness and upbeat Gross Domestic Product figures from Australia. The economy grew by 3.3% in the third quarter, better than expected.

Gold has recaptured the $1,800 on Tuesday amid stimulus hopes.

Oil prices continue spilling lower as OPEC+ ministers have yet to reach a deal on output cuts. WTI is changing hands at around $44.

The Canadian dollar is lagging behind some of its peers due to the slide in oil prices and disappointing Canadian GDP, which came out at 40.7% annualized growth in the third quarter.

E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis Forecast – Early Buying Tentative at Current Levels

The first minor range is 12086.00 to 12512.25. Its 50% level at 12299.00 is potential support

On Tuesday, the index closed 1.3% higher, led by strong gains in all mega-cap tech stocks. The biggest support came from shares of Apple, which rose 3%.

November finished with the index posting an 11.8% return, its best performance since April. The market was boosted by positive vaccine news from several pharmaceutical companies. However, despite the positive vaccine outlook, Federal Reserve Chairman Jerome Powell called the economic outlook “extraordinarily uncertain” on Tuesday when he and Treasury Secretary Steven Mnuchin spoke before Congress this week as part of mandated updates on CARES Act funding.

Daily Swing Chart Technical Forecast

If the upside momentum continues then look for buyers to take out 12512.25. Strong buying volume could trigger an acceleration to the upside. Weak buying could still support a rally, but the move will be slower.

A shift in intraday momentum to the downside could lead to a test of 12299.00. Since the main trend is up, buyers could come in on a test of this level. If it fails then look for the selling to possibly extend into the next minor pivot at 12158.25, this is followed by the minor bottom at 12086.00.

If you’re a defensive traders then you should be watching for a move through 12512.25 then a lower close. This chart pattern is also known as a closing price reversal top. It won’t change the trend, but if confirmed, it could trigger the start of a 2 to 3 day correction.

If we don’t get a reversal top then the minor bottom at 12086.00 will take out greater importance. Taking out this level won’t change the main trend to down either, but it will shift momentum to the downside.

EUR/USD Daily Forecast – Resistance At 1.2090 In Sight

EUR/USD settled above the major resistance level at 1.2000 and is moving towards the next resistance at 1.2090.

Technical Analysis

EUR/USD has finally managed to get above the resistance at 1.2000 and immediately developed strong upside momentum. EUR/USD has not visited this area since 2018, and it remains to be seen whether previous levels will be in play in today’s trading.

The nearest resistance level for EUR/USD is located at 1.2090. If EUR/USD manages to settle above this level, it will head towards the next resistance at 1.2155.

On the support side, the previous resistance at 1.2000 will serve as the first support level for EUR/USD. If EUR/USD declines below this level, it will head towards the next support at 1.1965. A move below 1.1965 will open the way to the test of the support at 1.1910.

Crude Oil Futures: Downside losing momentum?

CME Group’s flash data for crude oil futures markets noted traders extended the uptrend in open interest for yet another session on Tuesday, although now by just 921 contracts. Volume, instead, diminished by nearly 64K contracts, partially reversing the previous build.

WTI looks supported around $43.00

The leg lower in prices of the WTI could be running out of steam amidst a small increase in open interest. That said, another downtick should not be ruled out yet, but the $43.00 mark is expected to offer decent contention in the very near-term.

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