Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD crossed 1.09 to expose 1.08
“Clearly, however, the Fed remains data dependent and in the near term there is still risk of dollar disappointment around Friday's jobs report.”
- BNP Paribas (based on Reuters)
Pair’s Outlook
The Euro continued to weaken further versus the US Dollar on Wednesday. EUR/USD pierced through 1.09 yesterday, while the weekly S1 failed to sustain losses of this currency pair. Now bears are aiming at May and July lows at 1.0819/08, which are immediately followed by weekly S2 and monthly S1 at 1.0799/68. There a decline of the Euro can be suspended in the near term, while traders are waiting for US employment data on Friday. More pronounced moves of the cross will therefore be expected to take place tomorrow.
Traders’ Sentiment
Bulls are holding the majority of open positions in the SWFX market, namely 52% of them, while commands to buy the Euro in 100-pip range from the spot climbed further from 48% to 53%.
GBP/USD to retake 1.54
“Markets will already have much to chew through by the time the press conference begins. Any concerns over GBP strength will resonate, but we remain committed sterling bulls from a strategic perspective.”
- TD Securities (based on FXStreet)
Pair’s Outlook
Strong US fundamentals pushed the Cable back under the 1.54 level, but the powerful cluster around 1.5360 limited the losses. Although the same group of supports is still preventing the GBP/USD from edging lower today, another portion of US fundamental might push the pair into the middle of the cluster to 1.5360. From a technical point of view, the Sterling should rebound, with the exchange rate returning to the 1.54-1.55 trading range. The 100-day SMA is the immediate resistance and should limit upside volatility.
Traders’ Sentiment
Bulls and bears broke out of equilibrium, with long positions taking up 51% of the market today. Meanwhile, the number of orders to purchase the British Pound declined from 65 to 63%.
USD/JPY in tight range between 100 and 200-day SMAs
“Now no decision has been made on that [Fed interest rate hike] and, what it will depend on, is the [Federal Open Market Committee's] assessment at the time. That assessment will be informed by all of the data that we collect between now and then.”
- Janet Yellen, Fed Chair (based on WBP Online)
Pair’s Outlook
The USD/JPY appreciated slightly more than anticipated and, as a result, stabilised at the highest in two months. Even though the Greenback is supported by the weekly R1 today, a sharper fall towards the 200-day SMA at 121.08 is possible if the fundamental data disappoints. At the same time, the 100-day SMA, along with the August 28 high (121.74) are providing resistance, a break of which should then trigger a rally towards the June high at 125.87 in a longer perspective.
Traders’ Sentiment
Market sentiment remains bearish, but with 63% of traders holding short positions, compared to 71% yesterday. The share of buy commands remains unchanged, accounting for 56% of the market.
Gold closed at Oct 2 low; 1,100 level to be next
“We think that a December rate hike is more likely than not and an appropriate market reaction is a lightening up of risk, weaker commodities, higher yields and a firmer dollar.”
- ANZ (based on CNBC)
Pair’s Outlook
The bullion is now declining for six consecutive days. Since Wednesday of the previous week gold has lost around $60 per ounce in its price, while yesterday a sell-off was extended below the four-month trend-line. Bearish action was stopped by the Oct 2 low at 1,106. Our expectations are turning further to the downside. Market participants are ready to price in the upcoming US payrolls data on Friday, and positive outcome may send the yellow metal as low as 1,100 and even below this psychological mark. The long term support for gold is July low at 1,070.
Traders’ Sentiment
As the precious metal continues to lose value, even more SWFX traders are fixing profit by closing short open positions. Yesterday the share of bulls has therefore risen from 50% to 54%, while bears are down to 46%.
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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