Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD held gains despite hawkish FOMC
“I don't think there's any fundamental shift here, just a bit of profit-taking after the minutes, and I don't see any change to the dollar's trajectory.”
- Barclays (based on Reuters)
Pair’s Outlook
EUR/USD gained value on Wednesday, despite hawkish FOMC meeting minutes mentioning a potential rate hike in December. A rally is being extended on Thursday, with the pair trading above 1.07. Any bullish outlook can become the main scenario only in case EUR/USD surges past July low at 1.0808. Our medium term expectations remain fairly pessimistic with respect to the single European currency. Consolidation below 1.06 (weekly S2) is required, in order to completely refocus on April low at 1.0519.
Traders’ Sentiment
Bullish share contracted from 56% to 54% in the SWFX market by Thursday morning. Meanwhile, pending orders to buy the Euro in 100-pip range from the spot price surged above 50% (to 52%) for the first time in more than two weeks.
GBP/USD trades in murky waters
“The [US] dollar strength continued since earlier this month following the upbeat jobs data, but investors have found a lack of fresh trading cues to prompt them to buy further.”
- Bank of Tokyo-Mitsubishi (based on Market Watch)
Pair’s Outlook
After having tested the immediate support cluster, the Sterling managed to preserve the bullish momentum yesterday, but failed at reaching the closest resistance. Nevertheless, the GBP/USD has already almost touched the 1.53 major level, ignoring the first stop in face of the 20-day SMA. The current rally is taking place mainly due to a USD sell-off, as a possibility of the Fed delaying the interest rate hike this year remains. The Cable risks retesting the 1.5185 cluster today if the fundamentals trigger a supply and negate current gains; else, we might see the 55-day SMA crossed.
Traders’ Sentiment
Once again 60% of traders are holding short positions (previously 61%), while the number of sell orders increased from 53 to 58%.
USD/JPY weakens after BoJ leaves policy unchanged
“If we are right, the Bank will probably respond by stepping up the pace of easing. The end-January meeting is the most likely venue to announce this.”
- Capital Economics (based on WBP Online)
Pair’s Outlook
The USD/JPY appreciated only 18 pips on Wednesday, piercing the nearest resistance, which is now forming a support cluster along with the weekly R1. However, the US Dollar got oversold today, leading the exchange rate close to the 123.00 major level, partially triggered by the BoJ’s decision to leave stimulus unchanged. The given pair is now under substantial pressure, which could lead to a decline today. The immediate demand area might still limit the losses, while technical indicators are no longer giving bullish signals, suggesting a drop of the USD price is likely.
Traders’ Sentiment
A total of 70% of all open positions are short today, compared to 75% yesterday. The share of buy orders edged up from 47 to 51%.
Gold rallies above 1,075 post-Fed
“Certainly $1,000 will be tested but we’re not necessarily thinking that it’s going to collapse.”
- BMI Research, a unit of Fitch Group (based on Bloomberg)
Pair’s Outlook
Gold was fully unchanged in value yesterday, with both bulls and bears failing to establish a lead after minutes of the latest FOMC meeting. Today we see the Dollar weakening and this situation is benefiting the precious metal. Still, bulls are far away from putting gold on a stable path of recovery. Only a climb above 1,100 is going to refocus attention back on the northern side. Short traders, however, are getting ready to push XAU/USD below the July low at 1,070 and we expect this happening in the nearest future. Success here would allow for losses down to 2010 low at 1,044.
Traders’ Sentiment
Market sentiment with respect to gold remains strongly positive for the moment, being that 71% of SWFX traders are holding long positions, down from 72% yesterday.
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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