iFOREX Daily Analysis : February 14,2018
iFOREX | Feb 14, 2018 06:23AM ET
The U.S. dollar was trading close to one-week lows against other major currencies on Wednesday, as sentiment remained vulnerable ahead of the release of the anticipated U.S. inflation data due later in the day.
Investors are expecting the upcoming report on U.S. consumer price inflation data due later Wednesday for further clues on how fast the Federal Reserve will raise interest rates this year.
Higher inflation could prompt the Federal Reserve to tighten its policy faster than expected.
USD/JPY was down 0.55% at a 15-month lows amid rising expectations the Bank of Japan will follow the Federal Reserve and the European Central Bank's examples in tightening its monetary policy.
Elsewhere, the euro was higher, with EUR/USD up 0.15%, while GBP/USD remained almost unchanged.
Cryptocurrencies extended their gains Wednesday as South Korea’s government signalled it would allow cryptocurrency exchanges to keep operating in the country.
Bitcoin was trading close to $9,000 on the Bitfinex exchange, up 2.53% compared to the previous 24 hours.
US inflation data is due Wednesday night and investors are looking for signs of whether the US economy is growing too fast, which could prompt faster interest rate increases and send investors looking for exits once again. The focus this week also falls on readings from the UK and Germany which will be in the spotlight, amid expectations that the world's leading central banks will soon start to step back from easy policies and start raising interest rates.
EUR/USD
EUR/USD finished Tuesday trading close to previous highs, remaining firm around 1.2380, with US CPI eyed.
The European Central Bank (ECB) is still cautious about inflation, with the ECB's own Ewald Nowotny noting recently that inflation has plenty of room to move higher.
Eurozone advanced GDP figures for the fourth quarter are due along with December’s industrial production and the speech by ECB’s Y.Mersch.
In the U.S., traders are watching closely on the release of US inflation data due Wednesday
Pivot:1.234Support:1.2341.23051.2275
Resistance:1.24051.24351.2465
Scenario 1:long positions above 1.2340 with targets at 1.2405 & 1.2435 in extension.
Scenario 2:below 1.2340 look for further downside with 1.2305 & 1.2275 as targets.
Comment:the RSI shows upside momentum.
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Gold
Gold prices rose sharply, supported by recent dollar weakness, as investors looked ahead to U.S. inflation data to gauge how it will impact the Federal Reserve's view on monetary policy in the months ahead.
Market analysts expect consumer prices to rise 0.3%, faster than December’s 0.1% increase, while core inflation is forecast to rise by 0.2%, a touch slower than December.
US consumer inflation data due Wednesday could raise expectations for a faster pace of Federal Reserve rate increases.
Pivot:1326
Support:13261321.51316
Resistance:133913461351
Scenario 1:long positions above 1326.00 with targets at 1339.00 & 1346.00 in extension.
Scenario 2:below 1326.00 look for further downside with 1321.00 & 1316.00 as targets.
Comment:the RSI is supported by a bullish trend line. Prices are ranging within a bullish channel.
WTI Oil
Oil prices were stable on Wednesday, following a slight drop on Wednesday, supported by a statement that Saudi crude oil output would drop in March.
Prices ended close to $59 on Tuesday due to signs of an oversupplied market, including rising U.S. inventories and increasing physical flows globally.
The American Petroleum Institute said on Tuesday that U.S. crude inventories rose by 3.9 million barrels in the week to Feb. 9, to 422.4 million. Inventory data from the Energy information Administration are now in focus.
Pivot:59.7
Support:58.458.0557.25
Resistance:59.760.2560.75
Scenario 1:short positions below 59.70 with targets at 58.40 & 58.05 in extension.
Scenario 2:above 59.70 look for further upside with 60.25 & 60.75 as targets.
Comment:as long as the resistance at 59.70 is not surpassed, the risk of the break below 58.40 remains high.
US 500
US equity indices posted a third straight day of advances on Tuesday trying to recover the drop of the previous two weeks.
The Dow Jones Industrial Average DJIA, +0.16% rose 0.2%, to 24,640.45, supported by a rise in shares of Goldman Sachs Group Inc (NYSE:GS). GS, +0.94% and Caterpillar Inc (NYSE:CAT). CAT, +1.10% while a decline in United Technologies Corp (NYSE:UTX).’s stock UTX, -1.26% represented the biggest drag on blue chips.
The S&P 500 gained 0.3%, to 2,662.94, with the consumer staples and the real-estate sectors supporting the index.
Meanwhile, the Nasdaq rose by about 0.5%.
Pivot: 2666.75
Support: 2765 2727 2687
Resistance: 2633 2600 2579
Scenario 1: long positions above 2633.00 with targets at 2687.00 & 2727.00 in extension.
Scenario 2: below 2633.00 look for further downside with 2600.00 & 2579.00 as targets.
Comment: the RSI is supported by a bullish trend line. The 20-period moving average crossed above the 50-period one.
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