Technical Analysis

EUR/USD was successful at testing 55-day SMA

“The euro’s gains are the continuation of the positioning unwind after the ECB’s underwhelming December meeting.”

- Standard Chartered (based on Bloomberg)

  • Pair’s Outlook

    EUR/USD booked another bullish trading session on Wednesday, as the currency pair spiked above 1.10 to touch the most important 200-day SMA at 1.1031. Another moving average, the 55-day SMA, used to be an easy target for the bulls yesterday, and it was penetrated relatively quickly. Now we are watching the 200-day SMA, which is immediately followed by 100-day SMA at 1.1061. In case both of them are violated, it will proclaim a significant advantage of the bulls in the market. Otherwise, EUR/USD is at risk of coming back under the 1.10 mark soon.

  • Traders’ Sentiment

    Bearish market share decreased from 57% to 56% during the previous trading session. In addition to that, pending orders became strongly Euro-positive for the first time in several weeks.

GBP/USD muted ahead of BoE meeting

“We often hear that the bulk of US dollar strength is behind us. We find the subliminal message (no longer worth being long) misleading.”

- Societe Generale (based on PoundSterlingLive)

  • Pair’s Outlook

    The US currency experienced an unexpectedly sharp sell-off on Wednesday, leading the Cable to a fresh two-week high. The two immediate resistances were broken, but the third one, namely the monthly PP and 23.60% Fibo, was able to cap the gains. The Sterling still has room to advance to the 1.53 major level, a break of which would imply the end of the falling wedge pattern, but the 23.60% Fibo is expected to cause a correction today. As a result, the Pound is likely to pierce through the closest support in face of the 20-day SMA and touch the psychological area of 1.51.

  • Traders’ Sentiment

    Bears are now in the majority (52%), while pending orders in the 100-pip range are equally divided between the buy and the sell ones.

USD/JPY attempts to recover from harsh sell-off

“The extent of USD weakness over the past week reduces the danger of a post-Fed squeeze on USD longs and makes it less likely that the Fed Chair will dwell heavily on foreign exchange risks when she speaks at the press conference.”

- BNP Paribas (based on Reuters)

  • Pair’s Outlook

    Broad US Dollar selling caused the strong support around 122.30 to be broken, which resulted in the USD/JPY stabilising on the edge of the third support at a one month low. Today the Greenback faces a rather strong resistance cluster, represented by the weekly S2, the 55, 100 and 200-day SMAs around 121.60, which might trigger more weakness and lead the pair down to 121.00, where the weekly S3 coincides with the monthly S1. However, a rebound is also possible, with the Buck climbing over the immediate resistance cluster and closing trade around the 122.00 major level.

  • Traders’ Sentiment

    Bears allowed the bulls to regain some numbers, as 69% of all positions are now long. The share of buy orders slid from 68 to 42%.

Gold remains under bearish pressure

“Gold remains locked in a fairly tight range as investors are either sitting on the sidelines or are set in their positions already leading into next week's FOMC meeting.”

- ANZ (based on WBP Online)

  • Pair’s Outlook

    The bullion saw its value climbing in the direction of the monthly pivot point on Wednesday. However, the bears were allowed to register the day-end losses, thus sending the price back below the 20-day SMA to 1,072. The long upper shadow formed by XAU/USD means that the US Dollar's bulls are keeping commodities under pressure before next week's Fed meeting. A rally is not off the table, but we expect the monthly PP at 1,086 to try preventing the bullish outcome, as it happened earlier last week. At the same time, a sufficient demand was set up by weekly PP and July low at 1,073.

  • Traders’ Sentiment

    Market sentiment with respect to the yellow metal has remained broadly flat during the previous trading day. We observed the total number of bullish positions rising from 62% to 63% in the SWFX market.

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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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