Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD to be anchored by 20-day SMA
“The first impact is on the euro-dollar rate, and the dollar should still outperform the euro in 2016.”
Pair’s Outlook
As expected, the EUR/USD cross managed to successfully test 20-day SMA and weekly S1 at 1.0850/45 yesterday. After touching the July low at 1.0808 the pair decided to bounce back and close the session at 1.0824. As daily technical indicators are giving stronger bullish signals, it is possible that some kind of a revival will take place on Friday. A climb back above the 20-day SMA will support the bulls to push EUR/USD up to 55-day SMA (1.0944) in the mid-term, while the bears are still hoping to see a sell-off continuing in the direction of the monthly pivot at 1.0724.
Traders’ Sentiment
The bulls are still holding slightly more than 46% of all trades, which puts the bears at 54% in the morning on Friday. Meantime, pending orders to buy the Euro vs Dollar slid from 29% to 27%.
GBP/USD tests down-trend; confirms pattern
“The USD can make new cyclical highs in the near term as US interest rate expectations adjust higher.”
- Commonwealth Bank (based on Business Recorder)
- Pair’s Outlook
Despite upbeat UK Retail Sales data yesterday, the GBP/USD currency pair extended its post-Fed slump. Trade closed near the 1.49 major level and, thus, just in front of the falling wedge’s support. This trend-line, also bolstered by the monthly S1 and weekly S2, should contribute to the Cable’s rebound. The immediate resistance in face of the Bollinger band is likely to be ignored, with gains capped around 1.50. A fall towards the support cluster’s lowest level, namely the weekly S2, is not out of the question.
Traders’ Sentiment
SWFX traders’ sentiment keeps improving, as 65% of all positions are long (up from 63%). The portion of sell orders, however, remains unchanged and in the majority, taking up 68% of the market.
USD/JPY retests cluster around 121.60
“I don't think many people were expecting the BOJ to make a move right after the FOMC, so the timing of the announcement came as a surprise. But upon closer inspection the contents show that the BOJ merely fine-tuned its policy, which is why the dollar came down.”
- Sumitomo Mitsui Trust (based on Reuters)
- Pair’s Outlook
The USD/JPY tested the weekly R1 resistance at 122.78, but stabilised slightly lower at 122.55 yesterday. The Buck jumped to a three-week high of 123.55 today, due to the markets misinterpreting the BoJ’s policy statement. Once the situation was reassessed, the pair retreated from the daily high and continued its way into the red zone. The Greenback remains supported by the strong cluster around 121.60, which is likely to limit the losses; however, volatility could stretch even further below. The bullish momentum might also be regained, but with the 123.00 level intact.
Traders’ Sentiment
Exactly three quarters (75%) of traders are short the US Dollar today, while the number of sell orders increased from 60 to 66%.
Gold retreats the most since mid-July
“Continued strength in the dollar is weighing upon precious metals following the Fed's rate announcement and we are likely to see recent low prints once again tested over the short term.”
- MKS Group (based on CNBC)
Pair’s Outlook
Yesterday the bullion depreciated very substantially, by losing more than $20 per troy ounce. Market realized the importance of this week's Fed decision and the Dollar rallied afterwards. XAU/USD pierced through the first support at 1,062 (weekly S1), but was eventually stopped by another weekly demand at 1,050. Both Dec 3 low and 2010 low at 1,046/44 were not touched, but it can happen next week. For Friday, we expect more cautious trading and profit-fixing, meaning gold prices will probably bounce back in the direction of 1,060/65 where it will again meet the weekly S1.
Traders’ Sentiment
Even despite a sharp plunge in gold prices in the past 24 hours, the total percentage of SWFX long open positions increased only marginally to 60%. Still, it signals about some profit-taking by the short traders.
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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