Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD to see rising volatility this week
“It’s probably reasonable to think we can spend time down below $1.05 now.”
- National Australia Bank Ltd. (based on Bloomberg)
Pair’s Outlook
EUR/USD bounced back from 1.0730 on Friday and posted an 80-pip loss during the trading session. Monday is important day in terms of EU and US fundamentals. A possible Fed announcement to raise a deposit rate may easily push EUR/USD below 1.06. We are looking at Apr low at 1.0519 as the next reliable support for this currency pair. This level is guarded by monthly/weekly S2 and lower Bollinger band, which are highly unlikely to give up quickly.
Traders’ Sentiment
We continue observing the bullish lead over bears of around six percentage points, which makes it a 53-47% distribution of trades opened in the SWFX market. Despite that, only 32% of traders have set their pending orders in 100-pip range to go long on the common European currency.
GBP/USD attempts to return above key support
“With the futures market pricing in a close to 70 percent odds of a December rate action, USD strength is likely to persist.”
- IG Securities (based on Business Recorder)
Pair’s Outlook
Last Friday the Sterling suffered a heavier-than-anticipated loss against the US Dollar, slumping over 100 pips, therefore, erasing all weekly gains. The 23.60% Fibo managed to stop the fall and should cause a rebound; however, trade opened under the 23.60% Fibo today, diminishing the Cable’s ability to appreciate. Meanwhile, the immediate support is located at 1.5114, namely the weekly S1, but is unlikely to hold the pair from falling deeper in case of a dovish Fed statement. On the other hand, the weekly PP and 20-day SMA should prevent the GBP/USD from rising higher if bulls take over.
Traders’ Sentiment
Bears remain in the majority, taking up 57% of the market (previously 61%). The share of sell orders edged up from 58 to 70%.
USD/JPY acts on Japan’s bank holiday
“With limited progress on structural reforms that could boost productivity, Abenomics has not significantly improved the long-run outlook for Japan’s economy.”
- Capital Economics (based on WBP Online)
Pair’s Outlook
Although the USD/JPY edged lower at the end of last week, the loss was only nine pips big. The Greenback is expected to take advantage of the bank holiday in Japan, partially recovering from the previous week’s losses. The immediate resistance is now represented by the weekly pivot point, while the up-trend remains the nearest support, now also bolstered by the 20-day SMA. Technical studies retain mixed signals, in spite of which, the US currency has a solid chance of retaking the 123.00 level and even reaching the second resistance if the fundamentals surprise with positive figures.
Traders’ Sentiment
Today 73% of traders are holding long positions (previously 74%), whereas the number of buy orders inched 7% points up to 53%.
Gold determined to cross July low at 1,070
“Despite popular opinion, gold’s strongest periods of price appreciation over the past 50 years have coincided with rising interest rates. So I think a rise in rates could actually be beneficial for gold.”
- MineLife Pty Ltd. (based on Bloomberg)
Pair’s Outlook
After moderate losses at the end of last week, gold opened substantially lower Monday morning. The bullion is setting eye on July low, which capped a decline twice during the previous working week. Bearish risks are also rising before today's announcement of the Fed. In case the 1,070 mark is crossed, the likelihood of monthly S2's (1,059) violation will increase. Trading volume remains high, meaning volatility is going to be uplifted. Meanwhile, in the aggregate, daily technical indicators are currently pointing downwards.
Traders’ Sentiment
Market sentiment with respect to gold remains strongly positive for the moment, as more than 70% of SWFX traders are holding long positions. On Friday the bullish scenario was supported by 72% of traders.
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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