Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD still bounded between 1.13 and 1.14
“Increasing the size of the program would probably put the most downward pressure on the euro of all the likely options.”
- CMC Markets UK (based on WBP Online)
Pair’s Outlook
Before the European Central Bank meets in Malta on Thursday, the EUR/USD cross decided to stay on hold during the previous 24 hours. The near term development is fully dependent on the ECB's decision today. In case more QE is signaled, we will expect the Euro to drop below 1.13, potentially targeting the demand area at 1.1240. Otherwise, more hawkish language may push EUR/USD upwards throughout the trading session, while bears are aiming at regaining the 1.14 mark back.
Traders’ Sentiment
The share of SWFX bullish open positions is unchanged at 45%. Meanwhile, percentage of pending orders to buy the Euro against the US Dollar in 100-pip range from the spot grew further from 55% to 56%.
GBP/USD extends consolidation, to jump towards 1.55
“The big thing they'll [the BoE] be looking at is the pass-through of foreign exchange movements on tradeable goods prices after the unusually weak pass-through from the recent strengthening of sterling .”
- Tony Yates, former BoE official (based on Bloomberg)
Pair’s Outlook
The Cable gave up on its early gains on Wednesday, as the BoE Governor’s speech caused investors to lose confidence in the Sterling. However, losses were limited by the 55-day SMA, which should also cause a rebound today. The GBP/USD is unlikely to break out of its consolidation range (between 55 and 100-day SMAs) today. Nevertheless, risks of piercing the immediate resistance persist, as strong fundamental data could provide a sufficient boost for that. Furthermore, technical studies retain their bullish signs, bolstering the possibility of a positive outcome.
Traders’ Sentiment
Bulls keep growing stronger, as 56% of all positions are now long. The portion of buy orders, on the other hand, slid from 36 to 34%.
USD/JPY makes a U-turn after testing 120.00
“The most notable influence on markets recently has been the quarterly reporting in the U.S, which has shown a softening of outcomes relative to expectations.”
- White Funds Management (based on Reuters)
Pair’s Outlook
The US Dollar inched seven pips higher against the Yen, remaining within the borders of the immediate resistance cluster, namely between the 20-day SMA and the monthly PP. The pair is expected to bounce back from the 120.00 level today and weaken towards the weekly PP at 119.23. A breach of the immediate support is likely to cause a slump towards the 118.50 support line, which is bolstered by the monthly S1 in October. Technical studies also point to a possibility of this area being tested soon, as signs are distinctly bearish in the weekly timeframe.
Traders’ Sentiment
Exactly three quarters (75%) of traders are now long the Greenback, whereas buy and sell orders returned to a perfect equilibrium today.
Gold closes below Aug high on stronger Dollar
“Our base case remains for higher U.S. real rates and lower gold prices, albeit with there being risks that the gold price weakness is pushed out further should the Fed surprise us and remain on hold in December.”
- Goldman Sachs (based on CNBC)
Pair’s Outlook
From the third attempt in three days the bullion has finally closed the daily trading below one of the most important supports, namely the Aug high at 1,170. The short term expectations are therefore shifting considerable to the downside right now as the sell-off may extend down to the 1,155 demand zone soon. There the price is going to meet both 20-day SMA and weekly S1. Additional support is offered by the monthly R1 at 1,147. Meanwhile, a yesterday's decline improved the aggregate signal from daily technical indicators, which changed from neutral to moderately bullish.
Traders’ Sentiment
SWFX market sentiment with respect to the precious metal remained broadly unchanged for the past three weeks. Yesterday the bullish share was flat at 52%, and an advantage remains very negligible right now.
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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