Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD tries to recover from 1.08
“After […] ECB, we think downside is again compelling, in particular since the ECB so quickly signalled the possibility of renewed easing.”
- Goldman Sachs (based on Bloomberg)
- Pair’s Outlook
Bears approached the market on Friday, following earlier ECB comments about possible policy changes in March. EUR/USD dipped below 55-day SMA and monthly PP to close the week just under 1.08. In the Asian session on Monday, however, it attempts to regain strength and come back into the triangle pattern. If successful, it will reestablish our mild positive view towards the pair with a possibility to extend a rally up to 1.0950-1.10 area in the mid-term. In case EUR/USD stays below 1.08 today, the focus will turn to 1.0723 (weekly S1) for the next 24 hours and 1.0521 (recent low) for the long run.
Traders’ Sentiment
SWFX bears remain in the majority of 54% for open positions, as do the pending orders in both 50 and 100-pip ranges from the spot.
GBP/USD to confirm the bearish trend
“Markets are concerned about both continued tightening and a U.S. recession. They likely only need to worry about one. Were the Fed to remind the market that it remains data-dependent, it could temporarily alleviate some of the pressure on USD.”
- Morgan Stanley (based on Reuters)
- Pair’s Outlook
Last Friday the Cable retested the down-trend, but ended the day with a weaker rally of 47 pips, due to a disappointment in UK Retail Sales data. Any attempts to appreciate today should be limited by the down-trend around 1.4316, as there are no clear signs of a breakout to occur. Technical studies, in turn, continue to give bearish signals, suggesting the GBP/USD could turn around and suffer a loss today. As a result, a possibility of the Sterling piercing the immediate support in face of the weekly PP exists, with the pair stabilising closer to the 1.42 major level.
Traders’ Sentiment
Market sentiment remains bullish, now at 66% (previously 67%). The share of buy orders, however, lost 14% points, falling down to 40%.
USD/JPY sets off with quiet trade
“It’s is true that the market has turned into a risk-on mood, but I don’t expect sustainable gains in [Tokyo] stocks. That’s making the dollar top heavy [against the yen] from where it is now.”
- Bank of Tokyo-Mitsubishi UFJ (based on Market Watch)
- Pair’s Outlook
The Greenback overperformed at the end of the previous week, as the target resistance in face of the 20-day SMA was overcome. The USD/JPY now finds itself locked between the 20-day SMA from below and the monthly S1 from above. Meanwhile, technical indicators shifted from bearish to mixed, implying that the Buck could be on the path of recovering its bullish momentum and, thus, might end the day above the psychological level of 119.00. On the other hand, trade could remain flat, as supply and demand circa the opening price are equally strong.
Traders’ Sentiment
Bearish traders’ sentiment remains unchanged at 71%, whereas the portion of orders to acquire the US Dollar increased from 54 to 64%.
Gold refrains from confirming triangle pattern
“The strength in stocks and the dollar is obviously a barrier to gold’s move higher. Gold is losing its safe-haven bid.”
- High Ridge Futures (based on Wall Street Journal)
- Pair’s Outlook
Our short-term views with respect to the bullion are broadly unchanged. Since Thursday the metal has been oscillating around 1,100. We are therefore remaining bearish on a daily basis, as downward pressure should be created by 100-day SMA and monthly R2 at 1,104/07. By violating this resistance gold is going to confirm the triangle pattern, the event which will change our outlook significantly to the upside. Main support is, however, offered by 20-day SMA/monthly R1/weekly S1 at 1,088/83. Inside such a dense technical cluster around the spot a continuation of the sideways trend is more likely.
Traders’ Sentiment
Advantage of long traders has been unchanged since last Thursday, as they continue holding about 55% of all open transactions 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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