Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD flat around 1.058 as ECB meeting nears
“The market is in a chicken race to sell the euro. Everyone is selling the euro while looking for a timing to buy it back.”
- Resona Bank (based on Reuters)
Pair’s Outlook
EUR/USD hovered modestly to the downside on Monday, but the currency pair saw few opportunities to be dragged significantly lower in course of the session. Euro-traders are waiting for the ECB gathering on Thursday, the main event this week. The crucial support remains unchanged, with the 1.0542/19 area pulling together three technical levels including weekly S1, lower Bollinger band and April low. Additional demand is offered by weekly S2/March low at 1.0492/61. From the other side, any possible gains will eventually confront a strong resistance at 1.0716/39.
Traders’ Sentiment
The Dollar became a bit more popular during the last day of November, as the bearish share picked up from 48% to 51%. Most of the commands, however, are set to sell the 19-nation currency.
GBP/USD struggles to preserve bullish momentum
“Markets have nearly priced in a December rate increase, so chances are there won't be much more fresh buying incentives. That could spark profit taking.”
- Gmo Corp. (based on Bloomberg)
Pair’s Outlook
A correction occurred on Monday, causing the Cable to erase intraday losses and end the day with a 21-pip gain. The weekly pivot point remains the closest resistance today, but a rather high probability of the GBP/USD falling down again persists. The November low at 1.5026 keeps supporting the pair and could hold the losses. However, technical studies are giving bearish signals in all timeframes, implying that a breach of the immediate support is possible. The second target to limit the losses is around 1.4980, represented by the Bollinger band and the weekly S1.
Traders’ Sentiment
SWFX traders’ sentiment remains rather strong, with 56% of all positions long, whereas 53% of all orders are still to sell the Sterling.
USD/JPY risks breaching up-trend again
“Given the (GPIF’s) big exposure to the currency market, the story implies that a further weakness of the yen is hard to expect.”
- A senior Japanese bank dealer (based on Market Watch)
Pair’s Outlook
There were no surprises in the USD/JPY’s performance, with the pair appreciating and returning above the up-trend. Even though the US Dollar weakened against the Yen in the early hours and is now continuously testing the immediate support cluster, from a technical point of view the US Dollar should extend its recovery today. The up-trend is also bolstered by the major level of 123.00, the 20-day SMA and the weekly PP, while technical indicators are giving bullish signals. The weekly R1, however, could provide sufficient supply and prevent the pair from edging up if fundamental data disappoints.
Traders’ Sentiment
Today 72% of traders are holding short positions (74% previously), while the share of orders to buy the Buck dropped from 68 to 67%.
Gold attempts to retake July low at 1,070
“Gold has the potential for further short covering to take prices higher, especially if emerging market physical demand stays strong.”
- HSBC (based on CNBC)
Pair’s Outlook
Disappointing statistics on Chicago PMI and US pending home sales dragged American equity markets lower on Monday, which consequently supported the safe-haven commodity. Gold was pushed above the weekly pivot point at 1,063 yesterday, and today's rally is already being extended above July low of 1,070. Closure above the latter will change our expectations back from negative to neutral. Extra gains can be prolonged up to 20-day SMA/monthly PP at 1,084/86. However, the long term estimate keeps bearish bias, as we are approaching the critical Fed meeting on Dec 16.
Traders’ Sentiment
At the moment around 70.26% of SWFX traders are holding long positions, a decrease of three percentage points' on a daily basis. This distribution reveals that gold is too overbought and long term risks are skewed to the downside.
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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