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market review 07 December 20

07 December 20

Rising Sino-American tensions curb vaccine and stimulus enthusiasm, Brexit eyed

The first full week of December kicks off with a mixed market mood. New US sanctions on Chinese officials weigh on the market mood while weak Nonfarm Payrolls raise hopes for a stimulus package. The FDA is set to approve a COVID-19 vaccine later in the week and Brexit talks continue at a higher intensity.

Nonfarm Payrolls and stimulus: The US gained only 245,000 jobs in November, nearly half the expected increase. The spread of the virus in America and the lapse of several federal support programs are taking their toll. Investors hope that the figures will convince Congress to strike a new stimulus deal, perhaps along the lines of the $908 billion bipartisan proposals. Reports suggest Senate Majority Leader Mitch McConnell is reluctant to move.

Vaccine hopes: The US Food and Drugs Administration (FDA) is set to approve the Pfizer/BioNTech covid immunization on Thursday, opening the door to the first injections on the following day. The UK will administer its first inoculations on Tuesday. Optimism about vaccines keeps markets bid.

Sino-American tensions have risen again amid a report stating the US is preparing new sanctions against around 14 Chinese officials. Beijing said it firmly opposes new restrictions.

Brexit: UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen spoke on Saturday and agreed to extend talks. Intense negotiations continue in Brussels with reports on compromises yet without a breakthrough. Chief EU Negotiator Michel Barnier told envoys that disagreements remain on the three contentious issues – fisheries, governance, and the level-playing field. GBP/USD is trading around 1.34, off the highs seen late last week.

EUR/USD is changing hands above 1.21 after German industrial output beat expectations at 3.2% in October. Markets await the European Central Bank’s decision on Thursday, with a potential expansion of the bond-buying scheme eyed.

Gold is consolidating its gains around $1,840 while oil price edge lower, with WTI around $46.

EUR/USD Daily Forecast – Support At 1.2090 In Sight

EUR/USD did not manage to settle above the resistance at 1.2155 and is moving towards the nearest support level at 1.2090.

Technical Analysis

EUR/USD failed to settle above the resistance at 1.2155 and is moving towards the nearest support level at 1.2090. There are no important levels between 1.2090 and 1.2155 so EUR/USD may move fast within this range.

In case EUR/USD declines below the support at 1.2090, it will gain downside momentum and head towards the next support level at 1.2000.

On the upside, the nearest resistance for EUR/USD is located at 1.2155. RSI has pulled back from recent highs so there is some room to gain upside momentum in case the right catalysts emerge.

If EUR/USD manages to settle above the resistance at 1.2155, it will move towards the next resistance level which has emerged near 1.2175. A successful test of this level will push EUR/USD towards the next resistance at 1.2220.

Gold Price Futures (GC) Technical Analysis – Holding $1835.80 Could Trigger Rally into $1870.30 to $1894.60

The early price action suggests the direction of the February Comex gold market on Monday is likely to be determined by trader reaction to $1835.80.

Bullish Scenario

A sustained move over $1835.80 will indicate the presence of buyers. The first target is last week’s high at $1852.70. Overcoming this level could trigger a surge into $1870.30 to $1894.60. Look for sellers on the first test of this area. They will be trying to produce a secondary lower top.

Bearish Scenario

A sustained move under $1835.80 will signal the presence of sellers. This could trigger a steep break into $1810.00 to $1799.90. Watch for counter-trend buyers on the first test of this area. If it fails as support then the selling is likely to extend into $1780.50 to $1767.20.

EUR/JPY: Major resistance band at 126.41-127.50 to cap – Commerzbank

“EUR/JPY last week reached a major resistance band offered by 126.41/127.50 – this is the location of the 2014-2020 resistance line, the 2020 high at 127.07 and the 2019 high – and we would allow for this to hold the initial test.”

“Dips should find nearby support at the October high at 125.09. Failure here is needed to alleviate immediate upside pressure and cast attention back to the November 19 low at 122.85 and the 121.63 October low.”

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