Currencies to watch

Euro (December)

Session close: Finished right at 1.18 down about 23 ticks

Fundamentals: The Euro edged lower on the session despite ECB board member Mersch saying how the ECB should plan for the end of bond buying and that the economic recovery will make stimulus unnecessary. Furthermore, early this morning German Factory Orders were better than expected and in the U.S. ADP Payrolls and Nonfarm Productivity was both lights. All in all, one would have thought the Euro would gain on the heels of this news. However, the focus remains a grind higher in the U.S dollar on tax-reform, ahead of Nonfarm and next week’s Fed rate hike meeting with a heavy dose of technicals that we discussed last night. Tomorrow brings German Industrial Production at 1:00 am CT, Eurozone GDP at 4:00 and a speech from Draghi at 10:00.

Technicals: We have been outspoken on our long-term bullish thesis but made it clear that yesterday’s move into support and below the rising trend line opened the door for the bears. Price action today has fought stronger fundamentals on the session and ground lower because of this. We are eyeing 1.1728-1.1730 as a strong buy opportunity.

Bias: Bullish/Neutral

Resistance –  1.18875-1.1903**, 1.1942**, 1.19975-1.2019***, 1.2154-1.2180****
Pivot - 1.1824-1.1837
Support – 1.1728-1.1730***, 1.1672**, 1.15785*, 1.1481-1.15***

Yen (December)

Session close: Settled at about .8910 and gained a quarter of a penny

Fundamentals: The Yen has been working itself higher on the session in the face of weakness in equity markets. The S&P sold off into the close yesterday and Asian markets took it on the chin overnight. The Nikkei, however, has cut losses in half ahead of the U.S close. Treasuries are rising along with the Yen, but Gold is the lagging musketeer. Data on Foreign Bond Buying and Investment in Japanese stocks is out tonight at 5:50 pm CT. There is a 30-year JGP auction is tonight. It does not look like the U.S government will shut down due to the lack of a budget deal, but traders should continue to watch for this and the Yen is a potential beneficiary. Japanese GDP is tomorrow evening.

Technicals: Price action traded into R2 today but retreated to settle just below R1 at .8913-.8917. The tape needs to get out above the 9-day moving average which aligns with R2 in order to spark a bullish intermediate-term setup. However, strong resistance lies ahead, a move out above here and specifically major three-star resistance will spark a short-covering rally that should garner legs.

Bias: Bullish

Resistance -.8930-.8939**, .8960**, .8982-.8995**, .9018-.9045***, .9119**, .9321-.9359****
Pivot - .8913-.8917
Support - .8880-.8884**, .8845-.88475**, .8801**, .8730***

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