· The dollar edged higher against the euro in holiday-thinned trading on Tuesday, ahead of the Christmas holiday, while the British pound looked set to snap a five-day streak of losses against the U.S. currency.
Against the dollar, the euro was 0.05% lower.
“The holiday has already shut several markets, and those that are open are lightly traded,” Marc Chandler, chief market strategist at Bannockburn Global Forex in New York, said in a note.
The dollar index, which measures the greenback against six major currencies, was up 0.06% at 97.715.
The dollar, up about 1.6% for the year as measured by the dollar index, has broadly benefited during bouts of risk aversion - because it is considered a safe-haven currency - and when markets have rallied, because the U.S. economy is outperforming other parts of the world.
· EUR/USD Price Forecast 2020
The EUR/USD pair is ending a second consecutive year with losses. Having started it with 1.1460, it's ending it sub-1.1100, with the year low at 1.0978. The bearish trend remains firmly in place, according to the monthly chart, with no signs of downward exhaustion just yet.
In the mentioned time frame, the pair is developing below all of its moving averages, with the 20 SMA been the strongest and around 1.1320. The 23.6% retracement of the 2018/2019 slump comes at 1.1265, while the 38.2% retracement is at 1.1510. The latter is critical, as the EUR/USD pair will enter bullish territory once it breaches above this level. EUR/USD hasn’t been around this level since January 2019. Technical indicators, in the meantime, remain within negative territory, aiming to recover, but lacking enough strength to confirm so.
On a weekly basis, EUR/USD is neutral, having been unable to find a certain direction since mid-October. The pair is hovering around a mild-bearish 20 SMA ever since then, while the longer moving averages remain far above the current level, with the 100 SMA converging with the mentioned 38.2% retracement. Technical indicators are stuck to their midlines.
The latter chart suggests that bearish pressure has eased, but that bulls are nowhere to be found just yet. The 1.1000 psychological figure is the immediate support level and a line in the sand as, below there, bears could become bolder and try to retest the 2019 low. The next bearish target once below 1.0880 is 1.0720, en route to 2017 low at 1.0340.
· U.S. President Donald Trump said on Tuesday he and Chinese President Xi Jinping will have a signing ceremony to sign the first phase of the U.S.-China trade deal agreed to this month.
Beijing has not yet confirmed specific components of the deal that were released by U.S. officials. A spokesman for China’s Commerce Ministry said last week the details would be made public after the official signing.
· The new head of the International Monetary Fund applauded the phase one trade deal between China and the U.S. as a “very positive step” for both countries and the world economy, and called for continuous discussions on broader policy topics.
In an exclusive interview with Caixin in Washington Monday, IMF Managing Director Kristalina Georgieva said she expects the agreement between the two countries to boost China’s growth to around 6% next year, up from the IMF’s previous estimate of 5.8% made in October. The earlier forecast was made before the U.S. and China agreed on the phase one deal on Friday which effectively pauses their 18-month trade war, rolls back certain tariffs, increases imports of some agriculture products from America, and contains a commitment to structural reforms and other changes to China’s economic and trade system.
In her interview with Caixin following the phase one deal, the IMF head said the agreement should lessen the impact of the trade war on the world economy, and of course it would be beneficial for China growth.
But Georgieva also warned that this is just a trade truce. “To sustain the positive impact for the world, we need to go from trade truce to trade peace”.
· The United States needs to stop expecting North Korea to just “surrender,” said Harry Kazianis, senior director at D.C.-based think tank the Center for National Interest.
The more achievable goal would be to mitigate tensions with Pyongyang using economic solutions and collaboration with China, he suggested.
“I hope I’m wrong ... I think the North Koreans are going to test a intercontinental ballistic missile (ICBM),” Kazianis said. He explained it would probably be similar to the ICBM test in 2017, adding “I think the North Koreans have been very clear that they’re going to do this.”
North Korea said in early December that it would surprise Washington with a Christmas present.
President Donald Trump said Tuesday that North Korea’s cryptic “Christmas gift” to the U.S. may be a “beautiful vase” — rather than a missile test, as some experts fear.
· Crude Oil Price Forecast 2020
The year 2019 was rather a balanced one for oil prices, as the early rise was evened out in the rest of the year. The US-China trade war fueled the global economic slowdown undermined the efforts of the Organization of Petroleum Exporting Countries (OPEC) and its allies to balance the crude market and ramp up oil prices.
WTI Oil Technical Analysis
WTI is on a verge of charting a symmetrical triangle breakout, having traversed within the triangle throughout the past year. A symmetrical triangle pattern confirmation will likely portray a bullish outlook for the black gold in the medium-term.
On the upside, the advances could face initial rejection $63.20-$63.60 area, the confluence of the intermittent tops and 61.8% of the Fibonacci Retracement (Fib) of Oct 2018-Dec 2018 slump. The uptrend will gain momentum above the last supply zone, opening doors towards 2019 highs of $66.57. A test of the $70.00 level will be inevitable if the bulls take out the yearly high.
Alternatively, a failure to sustain above the 61.8% Fib resistance, the sellers could take over and knock down the rates back around $57-$55, where the 50-week SMA, 38.2% Fib of the 2018 crash, 200-week SMA and rising trendline support form a cluster of solid support.
Further to the downside, the $50 mark is the level to beat for the bears and could call for a bearish reversal should the bulls fail to defend it. Subsequently, the 2019 low of $44.52 will get exposed followed by the swing low of $42.45 that will emerge as a critical level.
All in all, with strong support levels aligned for WTI, the trend appears for higher prices before the consolidation phase sets in.
Reference: Reuters, FXStreet
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