Yahoo Finance EUR/USD Daily Technical Analysis for January 10, 2017
Stronger than expected Eurozone investor confidence or retail sales, could not fend off profit taking which sale the currency pair moved lower. Prices were unable to pierce through resistance, but it is clear that ECB members are convinced that it is time to end QE, when it terminates in September.
Technicals
The EUR/USD sliced through support levels near the 10-day moving average at 1.1990, which is now seen as resistance. Support is seen near an upward sloping trend line that comes in near 1.1840. A break of this level would quickly move to a test of the December lows at 1.17. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).
Eurozone Investor Confidence Rose
Eurozone Sentix Investor confidence rose to 32.9 in January from 31.3 in the previous month, indicating that the positive mood on stock markets continued at the start of the year. Sentix reported that there was no sign of a loss of momentum across indicators, with even latecomers such as Eastern Europe and Latin America continuing to improve, but Sentix earnings that the broad and synchronous upswing also means that the likelihood of overheating is increasing.
Eurozone Retail Sales Jumped
Eurozone retail sales jumped 1.45% month over month in November, more than compensating for the -1.1% month over month contraction in October and leaving the three months trend rate at 0.5%, up from 0.1% in the three months to October. The national numbers already suggested that the “Black Friday sale” is starting to have a clear impact on spending patterns that partly explains the marked variations between October and November. Still, strong data that ties in with the better than expected ESI economic confidence reading and the marked improvement in consumer confidence in recent months. Labor market data as well as survey numbers suggest ongoing job creation, which together with still low inflation and a gradual rise in wages is underpinning consumption trends.
Eurozone Economic Confidence Jumped
Eurozone ESI economic confidence jumped to 116.0 from 114.6 in the previous month. Expectations had been for a modest improvement to 114.8, although preliminary consumer confidence data already came in higher than anticipated and PMI readings also improved, so the renewed rise in the overall ESI is not a total surprise and confirms that the Eurozone economy ended 2017 in buoyant mood. Industrial confidence jumped to 9.1 from 8.1 and the services reading came in at 18.4 in December, up from 16.4 in the previous month. Consumer confidence was confirmed at 0.5. The December reading was the highest since 2000 and together with PMI reports suggesting that companies are running into capacity constraints.
German Manufacturing Orders Dropped
German manufacturing orders dropped -0.4% month over month, a lower than expected number – we had been looking for a decline of -0.3% month over month and consensus expectations were for an unchanged reading. October numbers were revised up to 0.7 5month over month from 0.5% month over month and the unadjusted annual rate improved to 8.7% year over year. The weakness over the months reflects a dip in export orders as well as lower than usual large ticket orders, with orders excluding large ticket items rising 1.8% month over month.
U.S. Chain Store Sales Rose
U.S. chain store sales rose 2.0% to 117.5 in the January 6 week, according to The Retail Economist, after dropping 2.3% in the last week of December and 0.4% the week before that. However, compared to the same week last year, sales slipped only marginally to a 3.8% year over year clip, versus 3.9% year over year previously. Though the big weather hit impacted the East significantly, net sales remained solid. The report noted that cash going into gift cards declined to 20.8%, versus 25.0% in 2016, and was the lowest since the 2011 holiday season.
U.S. December NFIB Optimism Dropped
U.S. December NFIB small business optimism index dropped 2.4% to 104.9, weaker than expected, after jumping 3.6% to 107.5 in November. A firmer reaction was anticipated as a result of the tax reform passage. The index was at 105.8 a year ago. The 107.5 from November was the highest since 1983. The percentage of firms planning to hire slowed to 20% from 24%, and those expecting a better economy slid to 37% from 48%, which is tied the highest since December 2016.
This article was originally posted on FX Empire
