Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD sets eye on 200-day SMA
“There’s some paring of outstanding dollar long positions with investors reluctant to carry dollar exposure into the holidays.”
- National Australia Bank Ltd. (based on Bloomberg)
Pair’s Outlook
Another bullish trading session was registered by the most traded FX cross on Tuesday. Daily gains amounted to 40 pips, but it was enough to violate the 55-day SMA at 1.0929. Now the nearest resistance is represented by the 50% Fibonacci retracement of an Oct-Nov downtrend and weekly R1 at 1.1009/14. However, even important supply is placed at 1.1041/56, namely the 200 and 100-day SMAs. One-day technical indicators are still projecting a positive trend for EUR/USD. Meantime, trading volume fell to the lowest level since Nov 30, meaning market volatility is likely to wane.
Traders’ Sentiment
The share of the SWFX bulls was curbed by one more percentage point to 44%. Pending orders in 50 and 100-pip ranges from the spot have deteriorated and are now 54-60% bearish on EUR vs USD.
GBP/USD attempts to preserve the pattern
“Post the Fed's meeting, traders may be squaring up long USD positions, whilst others are reluctant to put on new positions into year-end.”
- BNZ (based on Reuters)
Pair’s Outlook
The Cable ignored rather weak US fundamentals yesterday, as bears took over the market after the UK Public Sector Borrowing results were published. As a result, the British Pound dropped 60 pips, thus, breaching the falling wedge’s lower border, also making it the seventh slump in a row. Nevertheless, the pair might still return within the pattern’s borders today if the monthly S1, now the closest resistance, is overcome. Technical studies are no longer giving bearish signals, increasing the possibility of the bullish momentum to be regained, while the weekly S1 is to hold the losses.
Traders’ Sentiment
More traders expect the GBP to outperform the USD, namely 68% of them. Meanwhile, the share of buy orders edged up from 47 to 61%.
USD/JPY takes another shot at falling under 121.00
“The trend is still dollar positive as long as the economy performs.”
- RBS Securities (based on Business Recorder)
Pair’s Outlook
Although the USD/JPY declined on Tuesday, the immediate support in face of the monthly S1 was able to hold the losses. The same level is providing support today as well, but the Bollinger band keeps edging closer to the Nov low, implying that weak fundamental data could push the exchange rate down to this area if not lower. However, the Buck was unsuccessful at piercing the monthly S1 through December; therefore, potential for the US currency to rebound still exists, but with a tough resistance located circa 121.60.
Traders’ Sentiment
Slightly less traders now have a negative outlook towards the US Dollar, namely 70% (previously 72%). At the same time, only 53% of all pending orders are to buy the USD, down from 60% yesterday.
Gold corrects lower after two bullish sessions
“The Fed would be quite keen to continue monetary policy tightening, albeit only gradually over 2016, followed by a faster pace in the following years.”
- Societe Generale (based on CNBC)
Pair’s Outlook
The bullion ticked down in course of the trading session on Tuesday, after posting a confident rally on Friday and Monday. Yesterday's slump, however, was contained by the 20-day SMA at 1,072. Wednesday morning we are observing a marginal recovery up from the moving average. The key short-term supply is located at 1,080 (weekly R1), followed by a cluster of resistances at 1,086/89 (monthly PP, Bollinger band and current December highs). On the south side, some additional demand is still offered by the July low at 1,070.
Traders’ Sentiment
Although the yellow metal decided to bounce back on Tuesday, the spread between the bullish and bearish positions continues to narrow down. The percentage of long trades amounts to 55% on Wednesday, down one percentage point from Tuesday morning.
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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