Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD to move in the direction of 1.10
“EUR/USD has tended to rally on ‘risk-off' days and slip on risk-on ones as the Treasury/Bund spread drives the currency and the fall in Treasury yields has supported the euro in recent weeks.”
- Societe Generale (based on Pound Sterling Live)
Pair’s Outlook
All bearish attempts to send the most traded FX cross down failed on Tuesday. The bulls have eventually overtaken leadership and are pushing EUR/USD much higher in the Asian session on Wednesday. Risk-off sentiment is the main driver for growth, but positive US CPI later in the day may derail this rebound. Still, the bulls are aiming at 100-day SMA near 1.10, which is reinforced by upper Bollinger band and weekly R1. Another important supply is in turn offered by 200-day SMA at 1.1051. At the same time, to worsen expectations the bears have to consolidate EUR/USD below weekly PP/20-day SMA at 1.09/1.0888.
Traders’ Sentiment
SWFX bears remain in the majority of 56%, while pending orders are also bearish in both 50 and 100-pip ranges from the spot price.
GBP/USD: bearish trend intact
“I doubt if we are done yet for the pound selloff. I sense there’s a good chance for more downside.”
- Neil Jones, Mizuho Bank Ltd. (based on Bloomberg)
Pair’s Outlook
The Cable erased all daily gains on Tuesday, plunging towards the cluster around 1.4150, as the BoE Governor’s remarks ruled out the possibility of an early interest rate hike. Today, however, we should see the Sterling rebound and retake the 1.42 level. A strong resistance cluster is located around the 1.44 level, also bolstered by the down-trend, but a surge that high is doubtful. At the same time, the weekly S1 is providing immediate support, whereas the monthly S3 is the level to prevent the pair from falling deeper; a breach of which could ultimately lead to 1.3505—the 2009 low.
Traders’ Sentiment
Today 64% of traders are long the British Pound, compared to 63% yesterday. The portion of sell orders inched up from 63 to 68%.
USD/JPY slumps on risk aversion
“The performance of equities, particularly Wall Street, dictates the direction of dollar/yen. Equities have developed a relatively strong correlation with crude, and if the fall by the commodity should continue, we could see dollar/yen slip below 116.00 soon.”
- IG Securities (based on CNBC)
Pair’s Outlook
Even though the USD/JPY’s volatility stretched out to the second resistance, the pair still ended its rally in front of the closest one, namely the monthly S2. The risk-off sentiment eventually kicked in today, causing the Buck to lose ground and drop to the lowest level this week, at the moment of writing. Technical studies support the possibility of the negative outcome, but improvements in US fundamentals could help the Greenback recover from intraday lows and limit the losses near the weekly PP. Contrariwise, weak data is to contribute to the sell-off, leading the pair closer to the 2015 low.
Traders’ Sentiment
Bearish sentiment prevails, with 70% of all positions being short. Meanwhile, the share of sell orders added 14% points up to 68%.
Gold continues to fluctuate around weekly PP
“With three full weeks until the Chinese New Year, a key buying time for precious metal jewellery and investment products, demand ought to continue to be strong.”
- Mitsubishi (based on Bullion Vault)
- Pair’s Outlook
One more trading session was spent without any bullish or bearish lead. The bullion hovered in a quite wide range, but ended the US session just below the weekly pivot point at 1,086. Next three days will be driven by important fundamentals from US and other regions. In particular, US CPI data should drive gold on Wednesday. A positive surprise is likely to trigger losses for the yellow metal down to monthly R1/20-day SMA at 1,084. In the meantime, bullish traders are feeling confident in targeting the last year's September low at 1,098, which guards a major psychological level of 1,100.
Traders’ Sentiment
Yesterday more SWFX traders took the long stance with respect to the metal, by pushing the bullish portion up by one percentage point from 55% to 56%.
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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