Technical Analysis

EUR/USD to set fresh eight-month lows

EURUSD

“Conditions for a test of parity may finally be falling into place.”

- Nomura Securities (based on Bloomberg)

  • Pair’s Outlook

    EUR/USD traded on the downside yesterday, owing to uncertainty over European economic outlook and despite positive inflation data. The newest eight-month low at 1.0650 has already been touched Tuesday morning. We are now fully focusing on the April low at 1.0519, the closest major support which is reinforced by the monthly S2, weekly S3 and lower Bollinger band from above. Intermediate demand is offered by the weekly S2 at 1.0602. Trading volume remains at the highest level in three weeks, meaning volatility of the market may persist in the nearest future.

  • Traders’ Sentiment

    Bulls raised their share to 56% by Tuesday morning, the highest level in more than three months. Pending orders, however, deteriorated to just 35% for bulls in 100-pip range from the spot market price.

GBP/USD on the verge of returning to Sep low

GBPUSD

“The focus on inflation, or rather the lack of it shifts back to the UK and the US today and it is this lack of inflation that could well prompt a change of expectation on the part of the US Federal Reserve in the context of a possible rise in rates next month.”

- CMC Markets (based on WBP Online)

  • Pair’s Outlook

    On Monday, the Cable tested the immediate support, but stabilised in front of the 1.52 major level, as was anticipated. Technical studies and the 20-day SMA crossing the 55-day one to the downside are both indicating a possible decline to take place today. As a result, the immediate support cluster risks getting pierced, with the second solid target to limit the dips located only at 1.5096, the weekly S1. However, the UK and US fundamentals could still turn in favour of the Sterling, causing the currency pair to extend its post-NFP recovery, thus, edging closer to the 20-day SMA around 1.5275.

  • Traders’ Sentiment

    Both shares of short positions and orders to sell the Pound returned to their Friday’s levels of 60% and 59%, respectively.

USD/JPY sets eye on a new high

USDJPY

“It looks like a big bet on the Fed finally putting its money where its mouth is. It looks as though the Fed will indeed kick off its tightening cycle in December, providing a stark contrast to other major central banks and thus providing durable support for the dollar.”

- Westpac Banking Corp. (based on Bloomberg)

  • Pair’s Outlook

    Due to Japan falling back into recession, the USD/JPY currency pair managed to breach the immediate resistance and close trade near the 11-week high. Today the Greenback is likely to extend yesterday’s rally and possibly even establish a new 13-week high, but in order to do so, the given pair first requires to pierce the cluster in form of the weekly R1 and monthly R2 around 123.40. A fresh 13-week high is also expected to set the Buck on a path of reaching the 2015 high, unless the immediate resistance pushes the USD/JPY back under 123.00.

  • Traders’ Sentiment

    Bearish market sentiment returned to last Tuesday’s level of 73%, while the sell orders are outnumbering the buy ones by 2% points.

Gold keeps sliding down with uplifted volatility

Gold

“It seems all over the world, the economy is weak, also within China and India, so the potential market for consumers has also declined.”

- Heraeus Precious Metals (based on CNBC)

  • Pair’s Outlook

    With markets expecting to see rising US CPI numbers later on Tuesday, the bullion continued to lose steam yesterday. Traders are selling-off the precious metal on the back of stronger US Dollar. The spot price is just seven dollars away from Jul low at 1,070. Positive American data may push gold below this mark, with the next bearish target being placed at 1,059 (monthly S2). On the other hand, bullish traders intend to recover back towards the 1,100 zone. Trading volume rose to the highest level since Oct 30, which underlines increasing market turbulence as Fed's December meeting approaches.

  • Traders’ Sentiment

    Market sentiment with respect to gold remains strongly positive for the moment, being that 71% of SWFX traders are holding long positions.

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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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