Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD loses 150 pips, touches 1.09
“The Fed language on tightening in December was a stronger indication than we’ve had from them in a long time about going soon.”
- Westpac Banking Corp. (based on Bloomberg)
Pair’s Outlook
Yesterday markets were driven by the decision of the Fed to project a possible a rate hike in December. EUR/USD was therefore provided with substantial bearish momentum and it tumbled towards the 1.09 mark, losing 150 pips in the past 24 hours. Strongest demand is still ahead of the spot price. Bears are aiming at the weekly S1/monthly S2 at 1.0879/68, but another support is offered by May/July lows at 1.0819/08. These levels can be tested, in case US GDP growth exceeds estimates on Thursday. Otherwise, a rebound back to 1.1020 is likely on the back of disappointing numbers.
Traders’ Sentiment
SWFX sentiment is 52% bullish on Wednesday, while 60% of pending orders in 100-pip range from the spot are still set to sell the Euro.
GBP/USD in limbo, awaits trade trigger
“In determining whether it will be appropriate to raise the target range at its next meeting, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation.”
- FOMC (based on WBP Online)
Pair’s Outlook
This time the monthly PP failed to keep the Cable afloat, causing a 40-pip decline over the day. The pair’s immediate support is now the weekly S1 at 1.5241, while the September low remains a major point and lies out of reach at this time. At the same time, a strong resistance cluster is represented around 1.5333, where the 20-day SMA coincides with the 200-day one, but now having the monthly PP near the major level of 1.53 on the way as well. The weekly S1, however, might still cause a gradual rebound, as it rests upon the point, which caused a substantial rally two weeks ago.
Traders’ Sentiment
The share of bulls returned to its Tuesday’s level of 53%, whereas the portion of buy orders edged higher to 74% (up from 61%).
USD/JPY risks falling back to 55-day SMA
“In terms of economics, an uptick in industrial output and the Fed's hawkish tone reduce pressure on the BOJ to ease.”
- Merrill Lynch (based on CNBC)
Pair’s Outlook
Bulls refused to give up just yet, causing the Greenback to outperform the Yen on Wednesday, even erasing Tuesday’s losses. Even with the nearest resistance located at 121.27, namely the monthly R1, the USD/JPY appears to be struggling to climb too far above 121.00. The 200-day SMA is located at the given major level, but keeps failing to hold the losses when those occur, opening the door for a possible decline towards the 55-day SMA. However, according to technical studies the Buck is to extend its rally today.
Traders’ Sentiment
Bears keep growing stronger, as 59% of all positions are now long (previously 54%). At the same time, the number of orders to acquire the US Dollar increased from 61 to 74%.
Gold slides down from 1,182 to 1,156 after Fed
“At these prices gold has already priced in a December rate hike. $1,150 is a big level on the downside, and on the upside I think $1,165 will be pretty hard to break.”
- a precious metals trader in Sydney (based on CNBC)
Pair’s Outlook
Markets expected somewhat dovish Fed stance yesterday. A completely opposite outcome of the meeting pushed gold prices considerably to the south. While initially trading with a premium, the bullion's spot dipped down to 1,156 by the end of Wednesday trading and established a new two-week low. A decline was capped by the weekly S1 and the short term expectations assume a recovery from here. Major resistance is created by 1,167/71 area, where a sell-off should resume. A drop below 1,155 is required to affirm our negative projections with respect to gold amid uplifted US Dollar.
Traders’ Sentiment
It seems that bulls enjoy holding a slight advantage over bears. The percentage of long open positions has been completely unchanged at 52% since Thursday of the previous week, which gives the bullish traders a 4% lead.
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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