Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD approaches support cluster at 1.08
“China worries calmed down, pushing up the dollar higher. Excessive worries have receded. If crude oil prices regain much ground, the dollar may rise a bit more. But such a gain is still uncertain and investors still remain nervous.”
- Tokyo Forex & Ueda Harlow (based on Market Watch)
Pair’s Outlook
Yesterday neither bulls nor bears managed to gain control over the EUR/USD cross, meaning the exchange rate ended American session with almost no change in daily value. Despite that, bearish sentiment seems to be prevailing in the market right now, as the pair is moving inside the channel down pattern. The closest support is offered by 55-day SMA and monthly PP at 1.0812/28, with another demand being placed at 1.0774/46 (weekly S1; Bollinger). Successful testing of both areas is required in order to refocus market attention to much lower levels around 1.0650 (trend-line).
Traders’ Sentiment
Bearish SWFX market sentiment is unchanged at 55%, while pending orders are swinging around 50% in both 50 and 100-pip ranges.
GBP/USD attempts to regain the bullish momentum
“The sharp risk-off environment has been playing a heightened role in the latest bout of sterling weakness. The UK's large current account deficit means that sterling is one of the most vulnerable major currencies to any deterioration in risk sentiment.”
- ING (based on Reuters)
Pair’s Outlook
The Sterling dropped to a fresh five-year low against the Buck on Tuesday, amid disappointment in the Manufacturing Production figures. However, the Cable managed to partially recover from the intraday losses, now facing a rather strong demand around 1.44, represented by the Monthly S2, the weekly S1 and the Bollinger band. This cluster is the last solid obstacle, preventing the GBP/USD from falling to 1.4230, namely the 2010 low. From the technical point of view, the Pound should end the day in the green zone, with a chance to negate Tuesday’s losses completely.
Traders’ Sentiment
Bullish market sentiment returned to last Wednesday’s level of 62%, whereas the number of purchase orders remains unchanged at 43%.
USD/JPY rises on risk appetite
“It’s a kind of familiar picture with the equities starting the day positively but then reversing gains as oil prices fell to a new low, so that’s what dollar yen is really reacting to.”
- BNP Paribas (based on Bloomberg)
Pair’s Outlook
The monthly S2 was able to keep the USD/JPY from falling deeper yesterday, despite volatility reaching Tuesday’s opening price. Although the up-trend was violated last week, this week’s USD performance implies otherwise; Chinese fundamentals appear to be improving again, thus, reducing demand for safe haven currencies. As a result, the Greenback is likely to continue climbing higher, with the weekly PP acting as the closest resistance at 118.30. However, technical studies suggest the pair could still fall towards 117.00, as the indicators are now pointing south-ish.
Traders’ Sentiment
Bearish traders’ sentiment remains unchanged at 59%, whereas the portion of sell orders increased by 5% points up to a total of 63%.
Gold is on track to test demand at 1,084
“The market is expecting, perhaps in March the Fed will have its second interest rate hike. It will lead to a very strong US dollar, so gold prices are likely to face pressure.”
- Shandong Gold Group (based on CNBC)
Pair’s Outlook
A continuous move away from fixed income and safe-haven assets is putting more pressure on gold prices. They slid down on Tuesday, by nearing one of the most important support clusters at 1,084/80 represented by the monthly R1 and 55/20-day SMAs. On Wednesday we expect these levels to be tested, but bearish success is not guaranteed for the moment. Given that daily technical indicators estimate a rebound, we cannot rule out such a scenario in the next 24 hours. However, in case XAU/USD closes below 55-day SMA the focus will switch to the monthly pivot point at 1,065.
Traders’ Sentiment
After three days of stability, the distribution between long and short market participants began narrowing again, as the share of the bulls decreased minimally by one percentage point to 54% from 55%.
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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