Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD crashes 230 pips on Draghi's comments
“Draghi has provided clear confirmation that monetary stimulus will be stepped up in December, and both a stepping-up of QE and a deposit-rate cut are now on the table.”
- ABN Amro Bank NV (based on Bloomberg)
Pair’s Outlook
Pressure on the EUR/USD currency pair was enormous on Thursday, following the ultra-dovish ECB press conference. A drop exceeded all expectations as the pair lost more than two figures and even fell below the 200-day SMA to close the trading session at 1.1108, down from the day's opening level of 1.1338. EUR/USD was only stopped by the Sep low at 1.1086, a breach of which on Friday will definitely expose the monthly S1 at 1.1022, followed by monthly S2 at 1.0868. Some rebound is not off the table, but overall sentiment remains largely dovish.
Traders’ Sentiment
SWFX sentiment became neutral by Friday morning (55% bearish yesterday). Long pending orders in 100-pip range from the spot slipped from 56% to 42%.
GBP/USD makes effort to retake 1.54
“Whether England’s early exit in 2015 will weigh on sales in October thus remains an open question, especially as it is the host. As the BRC survey appeared to capture the rise while others did not, it is likely to attract more attention now, even though its relationship with the ONS data is not strong.”
- Nomura (based on FXStreet)
- Pair’s Outlook
The Sterling tested the resistance area around 1.55 for the seventh consecutive day and, surprisingly, ended up edging lower. The much better-than-expected US Existing Home Sales outweighed the UK’s strong Retail Sales figures, causing the pair to edge 22 pips lower under 1.54. The Cable’s attempts to return above the major level might be inhibited by the 55-day SMA, which is now the immediate resistance. However, due to lack of market movers today, the GBP/USD risks remaining within the borders of the 55-day SMA and the support at 1.5380, namely the weekly PP.
Traders’ Sentiment
Bulls and bears got closer to equilibrium, taking up 51% and 49% of the market, respectively, while 70% of all orders are to sell the GBP.
USD/JPY to fall back to 120.00
“This [ECB’s decision to hold the policy steady] raises further questions about the policy outlook for the Federal Reserve and Bank of Japan, both of which have meetings next week.”
- Westpac Banking Corp. (based on Reuters)
- Pair’s Outlook
The US Dollar exceeded expectations and rallied towards the resistance line at 120.63 on Thursday. Even though technical indicators are not giving any particular sense of direction today, the USD/JPY is still likely to undergo a correction. The eight-week consolidation trend remains intact and, thus, the Greenback should bounce back, making its way back to 120.00. Moreover, a strong resistance cluster is located just above the spot price, represented by the Bollinger band, 55 and 200-day SMAs, as well as the resistance line, for piercing of which the pair lacks momentum.
Traders’ Sentiment
There are now 70% of long positions, compared to 70% yesterday. The share of purchase orders, however, increased from 50 to 67%.
Gold avoids sharp downward moves
“The general expectation is for the Fed to raise rates next year, but in recent days we have seen some robust data from the U.S. and cannot completely rule out a December rate hike.”
- a trader in Hong Kong (based on CNBC)
Pair’s Outlook
Expectations with respect to gold perspectives remain moderately pessimistic, even though the bullion rejected the idea of moving strongly to the south yesterday. This outlook will be in place, as long as the price remains below the Aug high. Closest demand, the main target for bears, is placed around the 1,155 mark, which is built by weekly S1, 20-day SMA and Oct 12 low. Additional pressure is created from the upside by the 200-day SMA, currently at 1,174.
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 for a third day in a row at 52%, while their advantage still 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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