Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD comes back above monthly S1
“It seems that momentum is certainly on the side of being short the euro right now and long the dollar.”
- Chapdelaine & Co (based on Bloomberg)
Pair’s Outlook
A bounce back took place in the one-day chart for EUR/USD. The pair climbed above 1.1050 on Monday, pricing in worse than expected US housing statistics. Still, the probability of further gains remains tepid and rallies are expected to be contained by key resistance, namely 200-day SMA/weekly PP at 1.1117/33. Additional leg lower is likely to arrive in the nearest future. Short term losses should test the 1.10 psychological level, while a medium term decline will focus on May/July lows at 1.0819/08.
Traders’ Sentiment
Distribution between bulls and bears in the SWFX market in neutral again on Tuesday. Meanwhile, the portion of bullish pending orders in 100-pip range from the spot declined from 50% to 45% in the past 24 hours of trading.
GBP/USD supported by monthly PP
“Whether cable is going up or down very much depends on whether expectations of UK or U.S. rates are blowing hot or cold. It's very data dependent.”
- Rabobank (based on Reuters)
Pair’s Outlook
The Cable did not extend the latest decline yesterday, as the market confirmed support at 1.53, represented by the monthly PP and 20-day SMA. However, the bias is negative, and any attempts of the Sterling to rally should be stopped at 1.55, where the monthly R1 merges with the 100-day SMA and this month’s highs. Nevertheless, we expect the bears to be able to push the price beneath 1.53 in the nearest future, which in turn will imply a sell-off to the Oct 12 low and 23.6% Fibo (07.2014-04.2015 down-move) at 1.52.
Traders’ Sentiment
There is currently no significant difference between the longs (53%) and shorts (47%), nor there is any gap between the numbers of pending buy (50%) and sell (50%) orders.
USD/JPY retains bullish bias
“The arguments for a 2015 rate hike are fading. More specifically, while we are long-term dollar bulls, the 'trader' in us sees a greater chance of dollar weakness going into and after this week's FOMC meeting.”
- BK Asset Management (based on CNBC)
Pair’s Outlook
Although USD/JPY is currently negating recent gains, the outlook on the currency pair is bullish, as it is undergoing a correction. After consolidation, which should not extend far beyond the 55-day SMA, the price should rise up to 122, where it will come in contact with a tough resistance level represented by the 100-day SMA. Above this the potential targets will be the monthly R2 at 122.66 and the long-term rising trend-line at 123. The upside pressure will be alleviated once the rate dives under the monthly PP at 120.
Traders’ Sentiment
The SWFX market participants remain undecided: 49% are long and 51% are short. In the meantime, among the orders placed 100 pips around the spot 64% are to buy the Dollar against the Yen.
Gold treads water before FOMC rate decision
“U.S. dollar interest and option strikes at $1,150 should weigh upon gold over the next couple of days.”
- MKS Group (based on CNBC)
Pair’s Outlook
Prices of the bullion have been largely unchanged in the past three trading days, even though the metal registered slight losses during each of those 24-hour periods. Short term projection remains neutral, as long as gold holds below 1,167/70 (weekly PP/Aug high) or above 1,158/55 (20-day SMA/weekly S1). On the other hand, US durable goods data may provide the positive impetus in case of disappointing numbers. Any extra volatility should be created tomorrow when the Fed will make an interest rate decision.
Traders’ Sentiment
SWFX market sentiment with respect to the precious metal remained broadly unchanged for the past four weeks. Moreover, the share of bulls is completely flat at 52% already for five working days, meaning that 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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