Technical Analysis

EUR/USD recovers as risk appetite wanes

EURUSD

“If it [QE] is well expected, in a way the impact on the market should already be priced in. There’s diminishing return each time you do QE and more easing -- it’s getting harder and harder.”

- Nomura Holdings (based on Bloomberg)

  • Pair’s Outlook

    The single currency is holding to the gains that it has registered over the first trading day of a new working week. EUR/USD failed to consolidate below the Dec-Jan uptrend line, meaning the idea of bearish correction is postponed for some time in the future. Growth above 1.09 exposes the Dec-Jan downtrend near 1.0940, which had earlier refused the bullish scenario for three times. This line is immediately followed by 100-day SMA at 1.0962 and the monthly R1 at 1.0972. Only a spike above here will imply the 200-day SMA (1.1053) is at risk.

  • Traders’ Sentiment

    With EUR/USD growing in value, some traders fixed profit and therefore sent the bullish portion down to the four-week low of 43%.

GBP/USD closes above monthly PP

GBPUSD

“The market is not pricing in enough of rate hikes in the U.K.”

- GAM (based on Bloomberg)

  • Pair’s Outlook

    The Cable keeps balancing between gains and losses, being unable to start a new trend. However, despite the daily and monthly indicators pointing mostly south, the pair was able to rebound from 1.4230 and gain a foothold above the weekly R1 and monthly PP, which creates a good opportunity for another jump higher, though this will still be considered a part of the bullish correction. The next target could be the weekly R2, followed by a solid resistance area between 1.4636 and 1.4681.

  • Traders’ Sentiment

    There was a sudden and sharp shift in the sentiment, as the portion of bulls in the market plunged from 63 to 39%. At the same time, the share of orders placed to sell the Sterling rose from 51 to 64%.

USD/JPY enclosed between 121.50 and 120.60

USDJPY

“Overall we're seeing a little bit of risk-off...in the market and I think that's what's driving money into the yen.”

- Stephen Innes, OANDA (based on Reuters)

  • Pair’s Outlook

    While a cluster of numerous studies, including the 100-day moving average and a long-term trend-line, proved to be unable to resist the latest rally, the 200-day SMA successfully weathered increased demand for the Dollar. However, this does not imply a sell-off, being that there is now a significant support area at 120.75/54. Accordingly, the pair needs to breach either 121.50 or 120.75/54 to confirm its intentions. In the first case, the target will be the falling trend-line at 123 yen; in the second, the 2015 low at 115.85.

  • Traders’ Sentiment

    SWFX traders are not in a hurry to rethink their positions after BoJ’s action—72% of them stay short. Meanwhile, the buy orders hold a small advantage (16 pp) over the sell ones.

Gold takes a shot at 200-day SMA

Gold

“Weaker macro numbers out of the U.S. are also increasing the odds that the Fed's December move could have been an outlier, forced onto a central bank that basically had to move after promising to do so for much of the last year.”

- INTL FCStone (based on CNBC)

  • Pair’s Outlook

    The most significant moving average line on a 200-day time frame was touched in early November last time. Now gold has an opportunity to overcome this crucial resistance again. However, the presence of two-month uptrend, weekly R1 and upper Bollinger band makes the bullish task tougher. Downside risks are substantial, while the bears are aiming at retaking the support area near 1,100 (100/20-day SMAs; monthly PP; weekly S1; Oct 2015 low). In the meantime, a success at the mentioned closest resistance could lead to more gold purchases with a target at 1,149 (2015 downtrend).

  • Traders’ Sentiment

    Slightly less than 58% of all SWFX traders are now betting on price gains for the precious metal. This compares to only a 54% share of the longs yesterday, meaning the gap from the bears has widened to 16 percentage points.

  Don't miss our new daily forecasts for EUR USDGBP USDUSD CAD and USD JPY!  

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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