Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD rallies past 1.09 after ECB disappointment
“It’ll take more than this to kill a euro bear, but it’s going to be a more difficult winter for them.”
- HSBC (based on Bloomberg)
Pair’s Outlook
EUR/USD's surge by more than 300 points was hardly predictable yesterday, even though the ECB unveiled more support for economy. Daily growth of the Euro was the sharpest since 2009, while trading volumes spiked to reach 5-month high. The pair is managing to hold gains until the moment of writing on Friday. Both monthly PP and R1 were immediately eroded, supporting additional gains in the near term. However, EUR/USD will inevitably meet 55, 100 and 200-day SMAs in the range of 1.0996/1.1061. According to weekly technical indicators, a correction can start very soon.
Traders’ Sentiment
The bullish portion of SWFX positions accounts for 48% today, no change on a daily basis. Meanwhile, pending orders have become more bearish in both 50 and 100-pip ranges from the spot price.
GBP/USD forms falling wedge from Thursday’s surge
“It is still easier to support the dollar as the story is no longer just about the Fed hiking rates, but how frequently they could continue to tighten policy.”
- State Street (based on Reuters)
Pair’s Outlook
The US Dollar experienced a harsh sell-off on Thursday, mainly caused by the ECB’s unexpected stimulus decision, as well as a set of weak US fundamentals. As a result, the Cable skyrocketed, meeting resistance only in face of the third cluster at 1.5145, namely the 20-day SMA and the weekly R1. A correction is likely to take place today, forcing the GBP/USD to drop below 1.51, with the target support located at 1.5088 in face of the weekly PP. However, disappointment in the US employment sector could trigger a rally, causing the Sterling to return above the 23.60% Fibo.
Traders’ Sentiment
Although the share of bulls remains unchanged at 56%, the portion of orders to buy the Pound added 38 percentage points up to 72%.
USD/JPY muted in anticipation of Payrolls data
“The recent weak ISM data clearly illustrated the negative impact of the dollar’s appreciation. The US stock market may continue to be fragile, which is likely to discourage USD/JPY buying.”
- MUFG (based on FXStreet)
Pair’s Outlook
The US Dollar’s losses slightly exceeded expectations, as the pair stabilised at 122.59, rather than in front of the weekly PP at 122.74. Nevertheless, the USD/JPY is now facing a rather strong support cluster around 122.30, represented by the monthly PP, the weekly S1 and the Bollinger band. The pair’s exchange rate still has a 20-pip space to edge down, or even breach the immediate support cluster in case the Payrolls data disappoints too much; but the base case scenario is a rally towards the 20-day SMA and a possible retest of the weekly R1 at 123.22.
Traders’ Sentiment
Bearish market sentiment remains unchanged at 71%, whereas the number of purchase orders slightly dropped, from 68 to 65%.
Gold supported by ECB decision as trading volume spikes
“Further dollar short-term weakness will support the precious complex. Support levels for gold are in the mid 1,040's and immediate resistance in the high 1,060's.”
- MKS Group (based on CNBC)
Pair’s Outlook
The precious metal hovered in positive direction on Thursday, especially pricing in the "hawkish easing" from the ECB, which sent the Dollar strongly lower in the market. In the past two weeks we have seen more green candles appearing in the daily chart. It proclaims that an active phase of losses has probably come to an end, as markets are refocusing from the ECB to the Fed. We expect the bullion to trade predominantly sideways, unless either July low at 1,070 or 2010 low at 1,044 is breached. The mid-term projection, however, will continue carrying the bearish bias.
Traders’ Sentiment
After losing four percentage points in the past 24 hours, the portion of bullish positions dipped down to 67% in the SWFX market.
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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