Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD anchored by December downtrend
“On the FX side, the dollar was better bid against commodity currencies. The euro gained as well since it has been performing well lately in times of stress.”
- Jefferies (based on Reuters)
Pair’s Outlook
On Wednesday the most popular FX cross was testing the 1.08 area, which is reinforced by 55-day SMA at monthly pivot point. However, by the end of American trading the pair bounced off to close near 20-day SMA at 1.0880. The short-term action is still estimated to be bearish, given that EUR/USD keeps hovering under the two-month trend-line. By violating that crucial 1.08 zone, the pair will be exposed to a selloff down to 1.0750 (lower Bollinger band), followed by another downtrend at 1.0650. Such a case is presently expected by weekly/monthly technical indicators.
Traders’ Sentiment
Yesterday the share of long traders went up from 45% to 46%, while commands to acquire the single European currency jumped above 50% in both narrow and wide ranges from the current market price.
GBP/USD subdued ahead of BoE’s decision
“We expect no change from the BoE at Thursday's meeting and no signals that a change is imminent either.”
- Bank of America Merrill Lynch (based on Pound Sterling Live)
Pair’s Outlook
The British currency extended its bearish trend for another day yesterday, but with the immediate support cluster limiting the losses just above 1.44. The GBP/USD is now under the risk of breaching the monthly S2, with a sell-off towards the six-year low likely to be triggered afterwards. However, a the Pound is expected to react positively on today’s interest rate decision and reverse the trend, after having fallen for more than two weeks. Immediate resistance, namely the weekly S1, does not play an important role in limiting the gains today; thus, the 1.45 level might be retaken.
Traders’ Sentiment
Bulls remain strong, as 63% of all open positions are long. The share of sell orders remains unchanged at 57% for the third day in a row.
USD/JPY on the verge of breaking the up-trend completely
“It is hardly surprising that safe-haven currencies like the yen are under pressure. However, it is questionable how long this risk appetite will last.”
- Commerzbank (based on CNBC)
Pair’s Outlook
Even though the USD/JPY currency pair remained relatively unchanged on Wednesday, its four-pip rally still confirmed the up-trend. The outlook, therefore, remains unchanged, as the Buck should follow the trend and appreciate against the Yen again today. The up-trend is also supported by the monthly S2, creating a cluster around 117.65, while the closest resistance is represented by the weekly PP at 118.30. However, risks of edging lower persist, as technical studies retain their bearish signals; along with weak fundamentals, price could be pushed down to 117.20 or even lower.
Traders’ Sentiment
Today 61% of traders are short the US Dollar (previously 59%), whereas sell orders are now outnumber the buy ones by 4% points.
Gold meets resistance at 1,092 as correction is looming
“The selloff in riskier assets is boosting short-term demand for bullion. We think the Fed will continue its moderate approach to increasing interest rates.”
- Huatai Great Wall Futures Co. (based on Bloomberg)
Pair’s Outlook
The precious metal bounced off a strong 1,084 support cluster yesterday, while nearing the weekly pivot point at 1,092 by the end of Wednesday trading. Such a move was mainly prompted by reversed gains on stock markets across the world. More uncertainty should support gold in the mid-term, as the bulls could try to reclaim the 1,100 psychological mark. This scenario is encouraged by daily technical indicators. Otherwise, however, the bears are still setting eye on 20/55-day SMAs and the monthly R1 at 1,084/79.
Traders’ Sentiment
The total number of long open positions in the SWFX market changed marginally yesterday, as it recovered one percentage point from 54% to 55% it had lost one day before.
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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