Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD risks falling lower
“Nowotny's comments hit the euro just as it was beginning to firm, and the currency could weighed down if other ECB official hint at the need for further easing.”
- Monex (based on CNBC)
Pair’s Outlook
EUR/USD came under heavy fire once it approached the 1.15 level. However, once again these were fundamental rather than technical factors that weighed the currency down, namely dovish comments of the ECB official. In any case, the pair is now under the monthly R1, meaning it is vulnerable to an extension of the decline. The nearest significant support is only at 1.13, implying a potential dip of 80 pips in the nearest future. A more reliable demand area is at 1.1240/15, created by the monthly PP and 55-day SMA.
Traders’ Sentiment
The situation in the SWFX market normalises. While the share of short fell from 61 to 57%, the percentage of buy orders placed 100 pips around the spot price declined from 62 to 56%.
GBP/USD in tight range between 1.5415 and 1.5485
“Yesterday’s peak at 1.5510 has been the extent of the rally so far, and we really need to gain a foothold through here to argue for a move towards the 1.5630 area. The market is looking a touch overbought which could bring us back to support at 1.5420 and 1.5360.”
- CMC Markets (based on WBP Online)
Pair’s Outlook
The Cable experienced minor volatility on Thursday, ultimately suffering a slight decline on mixed US economic data. Nevertheless, the Sterling remains at a three-week high, but the situation might change today. The 100-day SMA and the monthly R1 keep providing resistance around 1.5485, lowering the Pound’s chances of edging higher. The support cluster just above 1.54 is also unlikely to give in, suggesting that the GBP/USD is to remain within the borders of the two clusters. Furthermore, technical indicators shifted from bullish to mixed both in the daily and the weekly timeframes.
Traders’ Sentiment
Although the SWFX sentiment remains bullish at 56% (previously 58%), the share of buy orders declined significantly, from 52 to 29%.
USD/JPY to increase Thursday’s bullish momentum
“There is a strong mood that investors are willing to sell when [the dollar] goes above ¥Y119.”
- Sumitomo Mitsui Banking Corp (based on Market Watch)
Pair’s Outlook
The ten-month support at 118.50 was tested yesterday, forcing the USD/JPY to recover from harsh downside volatility. However, the pair remained relatively unchanged over the day, as the Philly Fed Manufacturing Index weighed on the US currency, curbing its rally. The same resistance that held the Greenback yesterday, namely the Bollinger band and the weekly S2, is expected to limit the gains today as well. The upper target lies at 119.20, but a breakout towards 119.70 is possible if the fundamentals positively surprise.
Traders’ Sentiment
Although not as strong as yesterday, but market sentiment remains bullish at 73% (previously 74%). The gap between the buy and the sell orders remains small, namely four percentage points.
Gold struggles to stay afloat
“The gold trade right now is really about the Fed. With the numbers deteriorating as they are, it’s getting less likely there will be a Fed rate increase this year. The fundamentals, along with the technicals, are all pointing to a bullish close for gold at the end of the year.”
- RJO Futures (based on Bloomberg)
Pair’s Outlook
It is a critical moment for gold, as the precious metal is fighting to stay above the 200-day SMA in order to confirm a strong bullish signal and establish a new support area near 1,176. Yesterday, the monthly R2 at 1,181 failed to underpin the price, and the technical indicators except for a few studies refuse to support a bullish scenario. Still, the risks are skewed to the upside. If the bullion manages to consolidate atop the long-term moving average during the next few days, the first target will be the monthly R3 at 1,205, while in the longer-term perspective we will likely see a test of the key resistance at 1,230.
Traders’ Sentiment
SWFX market participants remain almost equally divided between the bulls and bears. At the moment 51% of open positions are long and 49% are accordingly 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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