Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD attacks 1.09 amid profit-taking
“There is no incentive to sell the euro now, with the ECB having taken action and no follow-through seen for some time.”
- Mizuho Securities Co. (based on Bloomberg)
Pair’s Outlook
The Euro was bid on Tuesday, as market participants attempted to fix profit from a decline that occurred Friday and Monday. Additional signs of buoyancy are coming from the fact that EUR/USD is currently able to trade above an important resistance, namely the 38.2% Fibonacci retracement of the Oct-Nov decline and monthly R1 (1.0892). A success here should encourage more purchases in the next 24 hours, with the bulls aiming at 55-day SMA at 1.0980. Another supply is created by 200-day SMA at 1.1030.
Traders’ Sentiment
Distribution between the bulls and bears in skewed significantly in favour of the latter, as they are holding 57% of all positions. Pending orders are also Euro-short, even though 50-pip commands dipped on Tuesday, while 100-pip orders improved from 39% to 48%.
GBP/USD risks falling back under 1.50
“We think there has been a breakdown in the market sentiment in that the BoE’s MPC will “follow” the FOMC, leading short-term interest rate spreads to move significantly in favor of the USD vs. the GBP.”
- RBS (based on FXStreet)
Pair’s Outlook
Weak UK fundamentals triggered another GBP/USD sell-off yesterday, with the pair dropping towards the immediate support at 1.4960. Nonetheless, trade closed above the 1.50 major level, but technical indicators retain their bearish signals, suggesting another decline is possible. The weekly S1 and the Bollinger band around 1.4950 are to limit the dips, whereas the weekly PP keeps providing immediate resistance. None of these levels are expected to be broken today, with a chance of the Cable remaining flat, amid lack of market movers.
Traders’ Sentiment
Less traders retain a positive outlook towards the Pound, namely 58%. Meanwhile, the share of purchase orders slid from 74 to 42%.
USD/JPY on the edge of negating last week’s gains
“Every time we see risk aversion, we see the market paring back short euro positions, short yen positions.”
- Nordea Bank (based on Reuters)
Pair’s Outlook
The USD/JPY suffered a 44-pip loss yesterday, with the immediate support cluster preventing the pair from maintaining trade lower. The Yen remains strong due to ongoing oil price slump, with buoyant fundamentals providing an extra boost. The 20-day SMA is now the closest support, but a fall towards the cluster around 122.30 is possible, as demand for safe haven currencies (such as the Yen) is higher. Meanwhile, technical studies now have a proper sense of direction, emitting bearish signals in the daily timeframe.
Traders’ Sentiment
Exactly three quarters of all open positions are now short (previously 71%). At the same time, the number of orders to acquire the US Dollar added four percentage points, up to 68%.
Gold supported by July low, weaker Dollar
“Gold will consolidate in the $1,065 to $1,085 range ahead of the Fed meeting.”
- Lee Cheong Gold Dealers (based on CNBC)
Pair’s Outlook
Persistent instability of the Greenback's value and positive Chinese inflation numbers are creating demand for gold on Wednesday, following a rise we have already observed on Tuesday. Technical support is provided by July low at 1,070 and weekly pivot point at 1,073. The nearest resistance is 20-day SMA at 1,078. A surge above this level will expose the monthly pivot point at 1,086, which acted as an impassable supply last Friday. Meantime, trading volume slumped to the lowest level in four days, paving the way toward lighter volatility in the near term.
Traders’ Sentiment
Following a short-living stabilization at 64% on Tuesday, the total number of bulls resumed falling down on Wednesday and reached 62%. It proclaims that bears are benefitting from gold's overbought status and are entering the SWFX market with fresh open positions.
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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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