Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD keeps grinding higher
“It seems the rally in risk assets is over after investors covered their short positions. I suspect share markets will not have an easy time for now as investors look to earnings, so the dollar is likely to be capped as well.”
- a trader at a major Japanese bank (based on CNBC)
Pair’s Outlook
Despite the gravestone doji formed on Oct 11 and proximity to a strong resistance level the bulls keep pushing the price higher. Still, the monthly R1 remains intact, and most of the monthly technical indicators are bearish, meaning the risks are skewed to the downside. However, if the price closes above 1.14, there will be a high chance of a larger rally, namely to September’s high at 1.1450. The next target will be as far as the August high at 1.17.
Traders’ Sentiment
In the meantime, the SWFX traders are undecided with respect to the Euro’s prospects. At the moment 47% of positions are long and 53% are short. Indecision is observed among the pending orders as well: 55% to buy and 45% to sell.
GBP/USD attempts to return to 1.53
“In the UK, despite current low inflation rates, signs of a tightening labour market and of a gradual acceleration in wage growth highlight the risk of a build-up in domestic inflationary pressures.”
- Lloyds Bank (based on FXStreet)
Pair’s Outlook
A correction occurred yesterday due to deflation in the UK, taking the Cable’s exchange rate significantly lower. The pair dropped as low as the 1.52 major level, but some of those losses were eventually recovered. The Sterling should rebound today, although that might not be the case, as a significant amount of economic news could turn the tables around. Yesterday’s support cluster is now providing resistance, whereas the 23.60% Fibo and the weekly S1 are now forming a support around 1.5175. Technical studies are unable to confirm any scenario, while fundamentals suggest a rally.
Traders’ Sentiment
Less traders remain confident in the Pound, namely 58% (previously 61%). Meanwhile, the number of buy orders slid from 57 to 35%.
USD/JPY risks breaking out of consolidation
“It seems the rally in risk assets is over after investors covered their short positions. I suspect share markets will not have an easy time for now as investors look to earnings, so the dollar is likely to be capped as well.”
- Trader at a major Japanese bank (based on Reuters)
Pair’s Outlook
The USD/JPY currency pair brought no surprises on Tuesday, as it slumped towards the second support area near 119.70. Meanwhile, Chinese data keeps disappointing, thus, strengthening the Yen; even though technical indicators are now showing mixed signs, the Greenback risks falling deeper today. However, the Buck has been in a consolidation trend for almost five weeks now and closed trade at the lowest in that period, suggesting there could be a rebound, despite poor fundamental data expectations. The weekly S1 and Bollinger band keep providing support and could stimulate a surge.
Traders’ Sentiment
Bullish market sentiment returned to last Thursday’s level of 72%, while the share of orders to buy the Buck increased from 65 to 76%.
Gold charges at 200-day SMA
“The rhetoric over gold, particularly out of the States, has been that no move on interest rates is positive for gold.”
- Ayers Alliance Securities (based on Bloomberg)
Pair’s Outlook
The price of gold managed to exceed its August maximum early this morning, but further appreciation of the yellow metal seems doubtful. During its latest rally XAU/USD did not encounter any notable resistances, and now it is facing a cluster formed by the 200-day SMA and monthly R2 among others. Moreover, the technical indicators are mixed, saying the momentum is too weak right now to pierce such an obstacle. Accordingly, we expect a sell-off in the nearest future, and there could be a decline down to 1,150 (monthly R1) before the price stabilises.
Traders’ Sentiment
There is still no consensus among the SWFX market participants regarding the future of gold price. The current sentiment is exactly the same as yesterday: 52% of positions are long and 48% are short.
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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