Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD fails to cross 7-month trend-line
“A little caution on the bullish U.S. dollar story is understandable into a week which includes non-farm payrolls and lots of Fed commentary.”
- Westpac Banking Corp. (based on Bloomberg)
Pair’s Outlook
The March-October uptrend stays strong for the time being, while being able to keep EUR/USD under bearish pressure. As long as trading continues below 1.1060, where the trend-line currently finds its location, we are going to hold a bearish stance with respect to the pair. Any rally is going to face substantial resistances in the 1.1100/60 area, which can easily resume a sell-off in the medium term. Key support is placed around 1.08 for the moment, where weekly S2 and lower Bollinger band merge with May and July lows.
Traders’ Sentiment
SWFX market sentiment went up from 51% to 53% over the weekend. At the same time, the number of pending orders to acquire the Euro in 100-pip range from the spot price dipped down to 44% (52% on Friday).
GBP/USD sets eye on 1.55
“Given the rise in market forecasts regarding the likelihood of more ECB easing by year end, the BoE may be more likely to delay its first rate hike in order to prevent too much monetary tightening being transmitted via the exchange rate.”
- Rabobank (based on FXStreet)
Pair’s Outlook
Last Friday the Cable managed to erase all week’s losses and even stabilise above 1.54, amid poor US fundamentals. Today the GBP/USD is expected to extend its rally, with the nearest resistance located around 1.5480, namely the 100-day SMA, which prevented the Sterling from climbing higher for three weeks in a row. In case of a breach, another solid supply is located at 1.5515. However, there is still room for the pair to edge back below 1.54, but a tough cluster, represented by the weekly and monthly PPs, the 20, 55 and 200-day SMAs, is likely to limit the losses circa 1.5360.
Traders’ Sentiment
Bulls and bears broke out of equilibrium, with 55% of all positions now long. The share of purchase orders increased from 26 to 64%.
USD/JPY sets off with quiet trade
“There was some disappointment about the BOJ last week. Everybody is in wait-and-see mode, for the U.S. employment figures.”
- Global-info Co (based on Reuters)
Pair’s Outlook
Although the Greenback remained strong through most of Friday, the excessive pressure from the weak fundamental data pushed the USD/JPY towards 120.60. Despite bullish technical indicators, the US Dollar still risks falling deeper towards the 120.00 major level, as there has still been no rather gradual sell-off after the 55-day SMA pierced the 200-day one. Moreover, the 55-day SMA is now the immediate resistance, just on top of the opening price, while a cluster around 120.00 should limit intraday downside volatility.
Traders’ Sentiment
Both net positions and net orders worsened in the beginning of the week. There are now only 34% of traders holding long positions, whereas 61% of all commands are to buy the Buck, down from 78%.
Gold to take another shot at 55/100-day SMAs
“If we do see a disappointing set of US data this week, the market’s current 50% probability for a December rate hike is likely to come down dramatically. This does set the stage for a range of currencies and gold to potentially see a strong rally this week.”
- IG Securities (based on WBP Online)
Pair’s Outlook
On Friday the bullion decided to continue trading with somewhat bearish bias, but no decisive attempts to breach 55 and 100-day moving averages took place. In the morning on Monday, however, gold slumped down to 1,134 (Oct 6 low), but has recovered since then. We are waiting for additional attempts to violate this important support at 1,140/38. A success here would expose the lower Bollinger band and weekly S1 (1,126) first, which are followed by the Jul-Oct uptrend at 1,116. The latter level seems to be sustainable enough, in order to provide XAU/USD with another mid-term bullish momentum.
Traders’ Sentiment
On Friday the share of SWFX bulls went up from 52% to 54%. However, market sentiment was once again completely unchanged in the past 72 hours.
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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