The three-day Santa Claus rally pushed equities to break new highs. By Friday’s close, the S&P500 index closed at 3240 while the Dow Jones gained a modest 23.87 points. The US dollar was weaker amid falling global trade tensions. Economic data was sparse on Friday with the exception of Japan. The weaker USD pushed most of its peers onto a strong rally.
The weakening USD gave a push to the common currency on Friday which closed over 0.72% on the day. Economic data from the Eurozone was quiet with only the ECB’s economic bulletin coming out. Most of the gains in EURUSD were driven by the USD weakness.
The currency pair’s gains saw the euro rising to the 1.1177 – 1.1193 region. As long as this resistance area is not breached, the currency pair could be pulling back. We expect EURUSD to remain range-bound within the resistance level and the lower support at 1.1131.
The British pound was seen posting a strong rally last week as the currency settled near a five-day high. The gains came largely on a weaker USD than the fundamentals. The UK’s Brexit saga will likely resume once investors return after the holidays.
The currency pair’s rally is consistent with a correction to the declines since early December. The gains see GBPUSD reversing off the resistance area near 1.3100. This also coincides with the hidden bullish divergence that we see from the Stochastics. But in the near term, the declines could keep GBPUSD supported towards the 1.2960 level.
The precious metal saw a rapid gain over the last week. However, the gains look to be easing as prices turn flat near the 1511 level. The gains in the precious metal come alongside a surge in equity prices. Lack of any clear fundamentals remains one of the major risks against a pullback.
Free Reports:
The precious metal’s gains have pushed it back to the previous highs near 1511 region. With the rally seemingly overdone, we expect XAUUSD to pullback. The breached resistance level near 1483 will be the likely target to the downside. Establishing support here could keep the precious metal range bound within the said levels.
By Orbex
