Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD consolidates around 55-day SMA
“One of the key issues for currencies this week is how much of a rate move is already priced into markets and where does it go from there.”
- CMC Markets (based on Bloomberg)
Pair’s Outlook
As expected, EUR/USD surged past the 55-day moving average line to close the week just below the 1.10 mark. During Friday, the pair has been contained by 200-day SMA at 1.1032, which remains a very formidable resistance for the bulls. Monday-Tuesday development is likely to be cautious, as we are nearing the Fed rate decision on Wednesday. Our short term outlook is neutral for the next 24 hours, while the weekly PP at 1.0943 is acting as an important demand.
Traders’ Sentiment
During the weekend the total percentage of bullish positions has remained broadly steady at 45%, providing a total gap of 10% with respect to the bears (55%). Alongside, pending orders in both narrow and wide ranges are swinging around the 50% mark.
GBP/USD set to return under 1.52
“Recent data suggest that there is sufficient momentum in the US economy to push the various labor market slack measures further down, supporting the FOMC’s confidence in the inflation outlook. Therefore, we see no reason to change our long held call for a December rate hike.”
- Rabobank (based on WBP Online)
Pair’s Outlook
The Cable ignored the positive US fundamental data on Friday, as the IMF’s upbeat report on the UK economy boosted the British currency. However, the resistance trend-line was not reached, as the 55-day SMA limited the volatility and is caused the pair to suffer losses on Monday during the Asian session. Due to lack of market movers, the correction is likely to bring the GBP/USD down to the 1.5195 level, where the monthly PP coincides with the 23.60% Fibo. In case of a breach, the second target to stop the decline is located around 1.5135, namely the weekly PP and 20-day SMA.
Traders’ Sentiment
Bulls and bears switched places on Monday, as 52% of traders are now holding short positions and the remaining 48% - long.
USD/JPY anchored around 121.00
“From the BOJ, nothing is expected. People are still unloading their dollar-long position ahead of the Fed.”
- Global-info Co (based on Reuters)
Pair’s Outlook
The USD/JPY experienced serious volatility on Friday, with trade closing in at the target support at 120.98, namely the monthly S1. The demand for safe-haven Yen was higher on Friday, created by the grim situation on the oil market. Volatility is likely to remain high before the FOMC Minutes, which could even lead the Buck to a two-month low. Right now the monthly S1 at 120.98 is preventing the US Dollar from reaching the Nov low, while a strong cluster of resistances around 121.60 is to keep the pair from advancing today.
Traders’ Sentiment
Bulls appear to be gaining numbers, as 41% of all positions are now long, compared to 34% on Friday. The number of orders to sell the US currency, on the other hand, increased from 59 to 69%.
Gold is supported by July low ahead of FOMC days
“With the Fed decision only two days away, price fluctuations will be limited as a rate hike is already priced in.”
- Wing Fung Financial Group (based on CNBC)
Pair’s Outlook
Price movements ranged from 1,062 to 1,079 on Friday of the previous week. Nevertheless, neither bulls nor bears managed to get control into their hands, meaning gold was practically flat by the end of the trading day around the 1,074 mark. At first, it proclaims that July low (1,070) keeps the bullion under pressure. Additionally, 20-day SMA allows no climb anywhere above 1,076. We see the volatility reading increasing later this week, especially before the Fed meeting. Core bullish target is the monthly PP at 1,086, while the bears are looking at 1,062 (weekly S1; Bollinger band).
Traders’ Sentiment
The share of the bulls has been completely unchanged at 62% over the weekend, while short SWFX traders are in minority with 38%.
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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