Forex Technical & Market Analysis: December 31 2012

MARKET OVERVIEW

2012-12-31 07:14 GMT

Time running short for ‘fiscal cliff’ deal

Well, it looks like negotiations on Capitol Hill are still ongoing and far apart to avoid January’s “fiscal cliff”, as the House and Senate are to reconvene later today, the final day for Congress to craft a resolution prior to the deadline. In a Sunday talk show, President Obama stated clearly that it appears the GOP’s top priority is to protect the tax rates for the wealthy, while his top priority is to ensure that taxes on the middle-class do not go up. Although the President says he remains optimistic, he also acknowledges that financial markets would be unfavorably impacted if the US economy stumbles off of the cliff.

As Kathy Lien, Managing Director at BK Asset Management explains in a research note: “If it becomes evident that a deal will be deferred to January, expect currencies and equities to sell-off in disappointment. With some major currencies pulling back and equities declining, we have already seen investors take profit and hedge their positions ahead of the Fiscal Cliff deadline. If Obama announces a stripped down plan and expresses confidence that a deal will be sealed by end of day Monday, we can expect currencies and equities to rally in relief.” – FXstreet.com

Forex Economic Calendar

2012-12-31 10:00 GMT | Greece.Retail Sales (YoY) (Oct)
2012-12-31 11:30 GMT | India.Current Account Balance $ (Q3)
2012-12-31 12:00 GMT | South Africa.Trade Balance (in Rands) (Nov)
2012-12-31 15:30 GMT | USA.Dallas Fed Manufacturing Business Index (Dec)

Forex News

2012-12-31 05:53 GMT | EUR/USD ending 2012 +2% higher after all
2012-12-31 05:03 GMT | Time running short for ‘fiscal cliff’ deal
2012-12-31 03:26 GMT | USD/JPY capped at 86 round with Tokyo closed
2012-12-31 02:17 GMT | AUD/JPY finishing 2012 above 89.00

TECHNICAL ANALYSIS

EURUSD

HIGH: 1.32345 | LOW: 1.31879 | BID: 1.31993 | ASK: 1.32000 | CHANGE: -0.13% | TIME: 08:02:34

OUTLOOK SUMMARY: Down
TREND CONDITION: Sideway
TRADERS SENTIMENT: Bearish
IMPLIED VOLATILITY: Low

MARKET ANALYSIS – Intraday Analysis
Upwards scenario: We expect resuming of the uptrend formation if the price manages to overcome next resistance level at 1.3215 (R1). Immediate focus comes on 1.3233 (R2) and 1.3250 (R3) in such scenario. Downwards scenario: Price setup is looking for a pullback development. Downside fluctuations remains for now limited to next support level at 1.3187 (S1), only clear break here would be a signal of market easing with next targets at 1.3165 (S2) and 1.3143 (S3).

Resistance Levels: 1.3215, 1.3233, 1.3250
Support Levels: 1.3187, 1.3165, 1.3143

GBPUSD

HIGH: 1.61731 | LOW: 1.61507 | BID: 1.61551 | ASK: 1.61561 | CHANGE: -0.06% | TIME: 08:02:35

OUTLOOK SUMMARY: Down
TREND CONDITION: Down trend
TRADERS SENTIMENT: Bullish
IMPLIED VOLATILITY: Low

Upwards scenario: The pair might face key resistive bastion at 1.6169 (R1). A break above it might activate upside pressure and suggest the short-term targets at 1.6177 (R2) and 1.6186 (R3). Downwards scenario: Break below the support at 1.6152 (S1), would signal an end of retracement phase and open way for downtrend formation on the medium-term perspective. Possible targets could be found at 1.6144 (S2) and 1.6136 (S3).

Resistance Levels: 1.6169, 1.6177, 1.6186
Support Levels: 1.6152, 1.6144, 1.6136

USDJPY

HIGH: 86.173 | LOW: 85.696 | BID: 86.144 | ASK: 86.152 | CHANGE: 0.2% | TIME: 08:02:36

OUTLOOK SUMMARY: Downward penetration
TREND CONDITION: Up trend
TRADERS SENTIMENT: Bearish
IMPLIED VOLATILITY: Low

Upwards scenario: The pair might keep general upside move intact after some stabilization ahead. Appreciation above the next resistance at 86.24 (R1) would enable next targets at 86.38 (R2) and 86.55 (R3) in potential. Downwards scenario: Bearish penetration below the support at 85.90 (S1) might determine negative sentiment for the remaining of the day with possible targets in focus at 85.77 (S2) and 85.64 (S3) intraday.

Resistance Levels: 86.24, 86.38, 86.55
Support Levels: 85.90, 85.77, 85.64

Prepared/Published By FXCC Forex Trading Blog.