European markets have so far managed to find some good news leading of yesterdays semi-positive data with a strong manufacturing reading. In Germany the IFO business climate lifted slightly to 109.0 (exp 108.2) as it showed there was a more upbeat attitude as of late when it comes to the German economy, this reading obviously does not take into account the recent terrorist accounts which may cause a slight damper in the coming months. Either way the EURUSD looked to push higher, and sadly, could not make much in the way of ground as it failed to really gain any momentum.
So far after pushing down to support at 1.0585 EURUSD moves have been somewhat muted, but the USD continues to gain strength despite the negative results and talk of a lack of a rate rise. For me the technical’s are taking charge here, and the 20 MA has so far led to strong rejections after each push higher. Indicating that the a bearish trend is certainly in control on the D1 chart. Looking lower than the current support level we have a very strong support level at 1.0492, and this is likely to be a strong target for any further bearish movements. Certainly with Draghi’s pressure on the market as of late, and the likelihood of stimulus is weighing on any possibility of a rebound, but who knows what Christmas will bring for traders, for some it certainly is the real possibility of parity for the first time in a decade.
The S&P500 is also looking volatile at present as it continues to hang just below strong resistance at 2103, after today’s volatile swings I would be surprised to see a retreat on the charts, as the bears have been rejected at every turn. The recent bank meeting over hikes today saw a jump from 8 banks calling for a hike to 9, however the dovish tone of the FED has given creed to the fact that it will likely be ignored for the time being. At present we are still seeing lacklustre of inflation which in turn will lead to the FED looking to push away the case of a hike – which is no surprise when they have an inflation mandate of 1-3% much like most central banks.
Silver is also looking very interesting as it looks to halt it’s bearish run on strong support at 14.121. Silver has always been a dark horse in the metal markets as it can swing both ways on positive economic data, as it used heavily in industry, but in the last decade has been adopted as a speculative metal much like gold. However, any further drops here are likely to see the market look to hammer as low as possible in a short amount of time, before sellers look to profit take and exit positions. For me the advent of a rate hike will certainly push it lower and 12.309 is likely to be they support level for silver and an actual floor for any future drops.