Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD in limbo between weekly PP and S1
“The dollar deserves to surge at least once more this cycle. A USD peak will come but not at the first Fed hike and maybe not until mid/late 2016.”
- JPMorgan Chase (based on Bloomberg)
Pair’s Outlook
Ignoring fundamentals from both Euro area and US, the most traded FX cross decided to have some rest for one more day on Tuesday. Even despite relatively high trading volume, EUR/USD's movements are muted and we observe little changes around 1.0650. Nearest supply and demand is created by 1.0674 (weekly PP) and 1.0586 (weekly S1). Closure below the support line will expose the April low at 1.0519, which remains the mid-term target for the bears.
Traders’ Sentiment
Bears of the SWFX market have gained a minimal majority of open positions in the past 24 hours, namely 51% of them. Separately, only 39% (35% yesterday) of pending orders are set to acquire the 19-nation currency in 100-pip range from the spot price at the moment of writing.
GBP/USD: bias still negative
“Robust U.S. domestic demand growth remains the main driver of U.S. economic activity and justifies a December Fed funds rate increase. Still, we expect the Fed's tightening cycle to be gradual which will limit significant USD upside.”
- Commonwealth Bank (based on Reuters)
Pair’s Outlook
The Cable’s volatility almost reached the second support area yesterday, with trade closing at 1.5077, slightly above the expected level. The Sterling is now attempting to regain the bullish momentum, but the daily and weekly technical studies remain bearish. The Pound is now under the risk of falling under the major level of 1.50, even though the Bollinger band is bolstering that area. Furthermore, the GBP/USD is first required to breach the weekly S2 and the November low (1.5027) in order to reach this target.
Traders’ Sentiment
Bulls took the upper hand, with 52% of all positions now long (previously 49%). Meanwhile, the gap between buy and sell orders keeps narrowing; today 43% of all commands are to buy the Pound.
USD/JPY on the edge of breaking the up-trend
“Yield support for the USD should thus continue to build into the Fed meeting. A probable “dovish” Fed hike as Chair Yellen emphasises a gentle trajectory suggests the Dec 16 hike could mark a temporary high for the USD, especially given the temptation to lighten positions into year’s end.”
- Westpac (based on FXStreet)
Pair’s Outlook
The USD/JPY appears to be ignoring positive US fundamental data, as the pair dropped 32 pips lower yesterday, even touching the up-trend over the day. Today trade opened just on top of the support trend-line, which should could a rebound today, with the pair edging closer to the 123.00 major level. Nevertheless, the Greenback is still under sufficient pressure and risks piercing the immediate support cluster. The second target lies just above the 122.00 mark, where the weekly S1 coincides with the monthly R1, forming another possible demand.
Traders’ Sentiment
Bearish traders’ sentiment returned to its Monday’s level of 73%, whereas the number of purchase orders increased from 52 to 56%.
Gold's rally may extend beyond 1,080 on Wednesday
“Gold rose on flight-to-quality as investors sought protection from volatile financial markets in the wake of global stresses.”
- HSBC (based on CNBC)
Pair’s Outlook
The precious metal's development was subdued in course of Tuesday, with no strong impetus provided by any of American statistical data. On the other hand, political tensions between Russia and Turkey might give the safe-haven metal a reason for growth. The rally is being extended through Wednesday, with the bulls aiming at weekly PP (1,080). Closure and consequent consolidation above this mark should refocus market attention to 1,100 (monthly S1). Medium term outlook, however, expects a confident confirmation of July low from the metal's side.
Traders’ Sentiment
Market sentiment with respect to gold remains strongly positive for the moment, being that more than 74% of SWFX traders are holding long positions. However, risks are skewed to the downside as there is more free space for new bearish positions to be opened.
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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