Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD to target 1.04 in anticipation of ECB
“Euro short positions have built up to the point where there is little room left to sell into, unless the ECB comes out with action far exceeding market expectations.”
- Sumitomo Mitsui Bank Ltd (based on Bloomberg)
Pair’s Outlook
On Wednesday EUR/USD created a long lower shadow candlestick, meaning the bears failed to preserve their advantage by day-end. Today, however, the state of affairs is estimated to change, as we have finally approached the ECB day. More than anticipated bearish surprise should push the Euro below both April and March lows at 1.0519/1.0461. By piercing through these levels, the cross will expose the monthly S1 around 1.04, which is guarded by the weekly S3. By looking at these supports, an extra drop towards 2003 low (1.0331) seems less likely.
Traders’ Sentiment
The bullish portion of SWFX open positions accounts for 48% on Thursday, up from 45% yesterday. Meanwhile, 100-pip pending orders from the spot price are completely neutral today.
GBP/USD heals wounds after Wednesday’s slump
“Overall, Yellen gave a fairly positive assessment of the economy that would be consistent with the Fed raising rates at their December meeting.”
- BNP Paribas (based on Reuters)
Pair’s Outlook
The fundamental data yesterday was in favour of the US Dollar yesterday, forcing the Cable to touch the 1.49 level. Even though trade closed above the intraday low, the target support was still breached. Today the Bollinger band and the weekly S1 are keeping the GBP/USD afloat, while the monthly S1 should hold heavier losses in case the immediate cluster fails. Technical studies shifted from bearish to mixed signals in the daily timeframe, indicating a possible rebound. The weekly S1 is the closest resistance, but the Pound has the potential to retake the 1.50 major level.
Traders’ Sentiment
Bulls and bears broke out of the equilibrium, with 56% of positions now long. The share of sell orders increased again, from 56 to 66%.
USD/JPY keeps struggling to preserve up-trend
“The ADP data confirm that the labor market data in the U.S. is healthy and robust. That puts a December rate hike on track.”
- BK Asset Management (based on CNBC)
Pair’s Outlook
The US ADP Employment Change data provided the Greenback with a sufficient boost to reclaim the area above the up-trend yesterday. Today the USD/JPY remains supported by the trend-line, now also reinforced by the weekly R1, but the tide might still turn in wake of no bullish impetus from the fundamentals. The closest cluster to limit the possible rally is formed by the Bollinger band and the weekly R2 around 123.70, whereas a breach of the up-trend could cause the exchange rate to edge closer to the weekly PP at 122.74.
Traders’ Sentiment
Bearish market sentiment remains unchanged, with bears taking up 71% of the market. At the same time, the number of orders to purchase the Buck slightly declined, falling 4% points to 68%.
Gold confirms Nov 27 low; outlook deteriorates
“Gold is likely to remain fragile and vulnerable to the downside as investor sentiment is clearly negative.”
- HSBC (based on CNBC)
Pair’s Outlook
On Wednesday, the bullion copied the candlestick of Friday when it slumped by around one percentage point to reach the 1,057 mark. Yesterday it went further to penetrate the Nov 27 low at 1,052, while on Thursday this price has already managed to reach the weekly S1 at 1,046. Our expectations for the yellow metal are strongly negative for the medium term, but monetary policy easing from the ECB may support gold as the safe-haven metal. However, the US Dollar's bullishness will continue to weigh on prices and the bears are now aiming at the 2010 low at 1,044.
Traders’ Sentiment
Market sentiment with respect to gold remains strongly positive for the moment. On Thursday around 71% of SWFX traders are holding long positions.
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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