Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD fails to consolidate at 1.13 after NFP
“For the euro to fall below $1.08, there has to be something that challenges the integration of the common currency.”
- Mizuho (based on Bloomberg)
Pair’s Outlook
EUR/USD's rally on Friday was halted by the 1.13 level, which turned to be a very significant resistance for the cross. Therefore, the common currency bounced back toward 1.12 by the end of weekly trading, despite weak US non-farm payrolls. Nonetheless, the Dollar's overall weakness means the Euro is still poised for gains in the nearest future. At least a rise above the 50% Fibonacci retracement of the Jul-Aug uptrend is needed to change our outlook from neutral to positive. Extra support will be offered by the bunch of moving averages at 1.1162/39.
Traders’ Sentiment
Distribution between bulls and bears is neutral on Monday morning. Alongside, the portion of long pending orders in 100-pip range from the spot increased from 38% to 43% over the weekend.
GBP/USD attempts to extend the rally
“We don’t expect any change in policy [BoE’s monetary policy], with a repeat of last month’s 8-1 vote. It will be interesting to see what the MPC’s minutes say about EM growth prospects given the MPC have had another month to digest some of the macro data.”
- TD Securities (based on FXStreet)
Pair’s Outlook
The British Pound managed to outperform the US Dollar on Friday and erase weekly losses, amid poor US Non-Farm Payrolls data. H however, gains were still limited by the 23.60% Fibo for the fifth consecutive day. Trade opened above the Fibonacci retracement today, which together with the weekly PP is providing rather strong support, increasing the chances of another rally to occur. Although the weekly R1 is now the immediate resistance, technical indicators keep giving bearish signals, suggesting the Cable is to undergo a correction towards the weekly S1 at 1.5111.
Traders’ Sentiment
Bulls now take up 64% of the market (previously 63%), whereas the share of purchase orders increased from 50 to 65%.
USD/JPY stuck between the monthly PP and 20-day SMA
“A BOJ easing is highly unlikely. The BOJ does not have a wide range of options for a further easing.”
- Deutsche Bank (based on Reuters)
Pair’s Outlook
Even though the weak US fundamentals caused the USD/JPY to drop close to the monthly S1 at 118.53, the pair managed to recover most of the losses by day’s end. Ultimately, the US Dollar remained unchanged against the Yen, losing only six pips, but remaining muted on Monday. The Greenback opened slightly above the monthly PP, which is providing strong support with the help of the weekly PP and the Bollinger band. Nevertheless, technical studies retain their bearish signs, implying that the Buck is to decline again.
Traders’ Sentiment
Market sentiment keeps improving, as nearly three quarters (74%) of all positions are long (previously 71%), while the number of buy commands also edged higher, from 56 to 60%.
Gold erases three-day losses, surges to 1,138
“The Fed is extremely unlikely to begin policy normalization as soon as this month and December is looking tenuous too.”
- ANZ (based on CNBC)
Pair’s Outlook
After initial jump, which took place immediately after the US report on non-farm payrolls, the bullion managed to hold gains and close around the 1,138 mark on Friday. Gold pierced through a number of important resistance lines during that bullish move. On top of that, the metal eroded all losses that have occurred since Sep 29. In case we see the price remaining upbeat on Monday, our expectations will refocus on the topside. Bulls are aiming at the 100-day SMA (1,144) at the moment, which acts as an intermediate supply before the Sep high at 1,156.
Traders’ Sentiment
Distribution between bullish and bearish market participants in the SWFX market remains quite positive on Monday, but the total share of the longs decreased from 56% to 53% over the weekend.
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This overview can be used only for informational purposes. Dukascopy SA is not responsible for any losses arising from any investment based on any recommendation, forecast or other information herein contained.
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