Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD faces formidable resistance under 1.10
“The ECB’s quantitative easing is working, and it has made a positive influence on gross domestic product growth.”
- Vitas Vasiliauskas , ECB Governing Council member (based on Bloomberg)
Pair’s Outlook
Daily outlook for the most traded FX cross is sidelined for the moment. We see the most important resistance area between 1.0980 (100-day SMA, Dec-Jan downtrend) and 1.1050 (200-day SMA). While the pair keeps trading below this area, the mid-term forecast will tend to have an overall bearish bias. Key target for the bears is 1.08, which consists of several heavy support lines including 55-day SMA, monthly pivot point and Dec-Jan uptrend. A failure below there could trigger some purchasing activity, but inside the current triangle pattern expectations are still neutral.
Traders’ Sentiment
SWFX bears remain in the majority of 55%, while pending orders are also bearish in both 50 and 100-pip ranges from the spot price in 56% and 54% of all cases, respectively.
GBP/USD keeps hovering over 1.4150
“While we expect the fed funds rate will be held steady in January, we continue to look for 100 basis points of rate hikes this year.”
- RBC (based on PoundSterlingLive)
Pair’s Outlook
The Sterling mostly ignored positive labour market data on Wednesday, appreciating only 32 pips against the US Dollar. However, the GBP/USD currency pair remains subject to weakness and is likely to experience another decline today. The weekly S1 remains the closest support, which succeeded in preventing the Cable from dropping lower, so far. A stronger cluster rests around 1.4035, but a fall that low today is doubtful. Meanwhile, technical studies retain mixed signals, suggesting Pound could retake the 1.42 level, especially if the US fundamental data disappoints today.
Traders’ Sentiment
Bulls remain strong, with 62% of all open positions being long. The number sell orders is unchanged, taking up 68% of the market.
USD/JPY to continue sliding to 2015 low
“The yen has shown maximum sensitivity to risk sentiment in the recent weeks. The upside for the yen, though, is likely to be capped before the Bank of Japan meeting next week, given they too are struggling with weakening inflation prospects.”
- Credit Agricole (based on Business Recorder)
Pair’s Outlook
On Wednesday the US currency edged closer to the 2015 low, but managed to recover from the daily low and stabilise just under the 117.00 level. The risk-off sentiment appears to be present today as well, meaning the USD/JPY is poised for more weakness. As a result, the Buck could drop towards the weekly S1—the first level of the immediate support cluster. At the same time, the weekly PP and the monthly S2 form a resistance circa 117.50, which was tested earlier today and triggered a sell-off, suggesting a break is unlikely. Meanwhile, technical studies imply the pair is to suffer another loss.
Traders’ Sentiment
Bearish market sentiment remains unchanged at 70%, while the number of sell orders lost 2% points down to 66%.
Gold is pressured by the 1,110 supply zone
“We definitely have some diversifying going on out of stocks and into fear trades, which is gold today.”
- Optionsellers.com (based on Bloomberg)
Pair’s Outlook
A one-day outlook for gold has a slight bearish bias, even though overall trading is likely to be range bound between 1,104 and 1,086. The bulls are expected to experience some difficulties near 1,110 where we see a formidable resistance being formed by Jan 8-20 downtrend line, monthly R2 and 100-day SMA. A success here will expose the 1,127/32 area (monthly R3; 200-day SMA), which itself may provoke a bounce back in the medium-term. In the meantime, the bears will continue focusing on 55-day SMA at 1,076, which guards Dec-Jan uptrend as the main target line.
Traders’ Sentiment
Yesterday we observed another setback among the bulls, being that their portion decreased from 56% to 55% in the SWFX market.
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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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