Financial market research and analysis

German factory orders contracted by 0.1% on month in January. The data dragged the EURUSD down as the sensitivity increases with the ECB meeting (due on March 10th) approaching. The market expects at least 10 basis points cut in deposit rates and at least 10 billion euro expansion in monthly bond purchases. EURUSD tanked to 1.0944 at European open after having reached 1.1043 on Friday, after the strong NFP figures triggered a broad-based rally in USD. The sentiment is clearly negative with the key mid-term resistance at 1.1047/51 (200-dma / Fib 38.2% retrace on Dec-Feb rise). Below this level, the EURUSD is considered in the bearish trend. A break below 1.0826 (Mar 2nd low) could pave the way for a further slide to 1.0800/10 (February lows) then all the way down to the 1.0725 (minor 74.6% before 1.0524 (Dec low). The conviction for a possible depreciation toward 1.0524 (Dec low) increases as the count down to the ECB meeting started.

USDJPY consolidated above the 113.50, minor 23.6% retrace on Feb decline. The strengthening positive trend suggests a further extension toward the major 38.2% retrace, 115.08, on Jan 29 – Feb 11 slide. Surpassing 115.08 will signal a potentially sustainable recovery to 116.34 and 117.60 (Fib 50% and 61.8% retrace). Support is seen at 113.50/30 (Fib level / 200-hma) before 112.00, last week’s low. The key support stands at 110.99 (Feb dip).

GBPUSD has broken the 1.4200 level briefly last Friday, yet failed to consolidate gains. Cable is currently back below the 1.4154, major 38.2% on February-March decline, signalling a potential pullback toward 1.4032/1.4000 (minor 23.6% / psychological support). If broken, we could consider a further slide to fresh seven-year low levels (1.3836). A daily close above 1.4154 should gather some upside momentum toward the 1.43 mark (pre-Brexit referendum date announcement).

AUDUSD extended gains to the critical mid-term resistance of 0.7385 (major 38.2% on May’15 – Jan’16 slide / Dec’14 high). The pair is now trading in the bullish consolidation zone with the possibility of a further rise toward the 75 cent mark (which is also the Fib 50%). On the daily chart, the formation of a bearish harami should be confirmed should the AUDUSD remain capped below the 0.7425 (intraday high) today. This could trigger a downside correction. The 200-dma (0.7252) is expected to lend support before 0.7208 (major 38.2% retrace on Jan-March rise). Above this level, the AUDUSD will be considered in the bullish trend with a potential of pushing higher toward the 75 cent level.

Gold consolidated gains between $1256/1259 as the Fed expectations remain soft following the mixed US jobs data (strong NFP yet soft wages growth). The upside momentum is ready to pick up for an extension toward $1300 mark. Support is eyed at $1250/1240 (March 3rd, pre-NFP low/ 200-hma).

WTI advanced to $36.72, a stone’s throw below the 100-dma ($37.10). Oil has managed to pick-up by circa 40% since it hit a twelve-year bottom in January. The appetite has somewhat been dented though after Moody’s announced it would put most of the oil producing nations under watch for possible downgrades. Trend and momentum indicators are positive, the RSI (65.8%) is not in the overbought territory yet, suggesting that there is potential for a renewed attempt to take over the 100-dma, and to target the $40 mark. On the downside, support is seen at $33.62 (200-hma), then at the 50dma ($32.32). If support at this level is broken, we could expect to see a further fall to $31.15 (21-dma) before a re-test of the $30 mark.