EU Session Bullet Report – Risk Appetite fuels strong dollar

EU Session Bullet Report

Stronger risk appetite drove stocks higher on Wall street yesterday, with the Dow Jones and S&P continuing their recent bullish march. S&P 500 is now trading above 2100, an important psychological level which may now see it test its record highs from earlier in the year.

The mood spilled over in to Asia this morning with the Shanghai composite up more than 4% on the day. President Xi was quoted as saying, that China can maintain annual economic growth of around 7% over the next 5 years.
As the positive move gathered pace, investors sold safe-haven bonds as they moved into riskier assets, driving US treasury yields and in turn the US dollar higher.

EUR/USD hit lows of 1.0935 and is now at 1.0945 at time of writing so further downside can not be ruled out. USD/CHF is also one to watch as it quietly continues its strong upward trend. The pair is trading more than 450 points higher from its low of 3 weeks ago.

Gold took a hammering yesterday, recording it biggest daily drop in 5 weeks to reach a 1 month low of 1114.26 before climbing back to 1120 at time of writing.

Elsewhere, Oil continues its recent recovery tipping just over $48 yesterday before falling back to $47.80, up 10% from last Wednesday.

Today, we can expect the action to continue as we have ECB President Mario Draghi due to speak at 08:00 GMT. Also, services PMIs from the Eurozone and UK this morning is followed by ADP employment data from the US this afternoon.

Trading quote of the day: What seems too high and risky to the majority generally goes higher and what seems low and cheap generally goes lower. William O’Neil

Green lines are resistance, Red lines are support

EUR/USD
Pivot: 1.1005
Likely scenario: Short positions below 1.1005 with targets @ 1.0895 & 1.085 in extension.
Alternative scenario: Above 1.1005 look for further upside with 1.103 & 1.107 as targets.
Comment: The RSI is badly directed.

GBP/USD
Pivot: 1.545
Likely scenario: Short positions below 1.545 with targets @ 1.5355 & 1.5305 in extension.
Alternative scenario: Above 1.545 look for further upside with 1.55 & 1.553 as targets.
Comment: The index currently faces a challenging resistance area at 1.545.

AUD/USD
Pivot: 0.7175
Likely scenario: Long positions above 0.7175 with targets @ 0.7225 & 0.726 in extension.
Alternative scenario: Below 0.7175 look for further downside with 0.715 & 0.712 as targets.
Comment: The RSI is bullish and calls for further upside.

USD/JPY
Pivot: 120.9
Likely scenario: Long positions above 120.9 with targets @ 121.5 & 121.8 in extension.
Alternative scenario: Below 120.9 look for further downside with 120.55 & 120.2 as targets.
Comment: The break above the resistance at 120.9 triggered an upward acceleration to 121.5.

USD/CAD
Pivot: 1.3115
Likely scenario: Short positions below 1.3115 with targets @ 1.3035 & 1.299 in extension.
Alternative scenario: Above 1.3115 look for further upside with 1.317 & 1.324 as targets.
Comment: A break below 1.3035 would trigger a drop towards 1.299.

USD/CHF
Pivot: 0.9875
Likely scenario: Long positions above 0.9875 with targets @ 0.9925 & 0.996 in extension.
Alternative scenario: Below 0.9875 look for further downside with 0.984 & 0.9815 as targets.
Comment: Technically the RSI is above its neutrality area at 50.

GOLD
Pivot: 1130
Likely scenario: Short positions below 1130 with targets @ 1110 & 1104 in extension.
Alternative scenario: Above 1130 look for further upside with 1143 & 1150 as targets.
Comment: As long as 1130 is resistance, likely decline to 1110.

OIL
Pivot: 46.74
Likely scenario: Long positions above 46.74 with targets @ 48.92 & 49.5 in extension.
Alternative scenario: Below 46.74 look for further downside with 46 & 45.16 as targets.
Comment: The RSI broke above a declining trend line.

DAX
Pivot: 10680
Likely scenario: Long positions above 10680 with targets @ 11030 & 11145 in extension.
Alternative scenario: Below 10680 look for further downside with 10460 & 10280 as targets.
Comment: The RSI is bullish and calls for further upside.

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