Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD breaches 1.1250, sets eye on 1.1330
“The market’s current mood is sufficiently downbeat and Yellen’s language likely to be sufficiently hedged that there won’t be a steep rally in U.S. dollar.”
- Westpac Banking Corp (based on Bloomberg)
Pair’s Outlook
Continuous worries about global economy helped the Euro in gaining more strength on Tuesday. EUR/USD penetrated the last monthly resistance line (monthly R3) at 1.1246 and closed the daily session near 1.13. Now the focus turns to the first weekly supply at 1.1330, which is guarded by the upper Bollinger band at 1.1344. A rally above here will imply extra optimistic sentiment, while core attention will then switch to the September 2015 high at 1.1460. Meanwhile, the move up is backed by aggregate daily technical indicators.
Traders’ Sentiment
Yesterday the bulls regained only one percentage point to push their portion up to 39%. Meanwhile, bullish share of pending orders declined to 47-48% in both 50 and 100-pip ranges from the spot.
GBP/USD enjoys quiet trade ahead of fundamental data
“The pound remains on the back foot despite a less dovish than expected inflation report and an until now softer dollar.”
- Citi (based on Business Recorder)
Pair’s Outlook
On Tuesday demand at the immediate support cluster triggered a buying spree of the Cable, causing the pair to recover and stabilise just above the closest resistance level. Technical indicators now shifted to the bullish side, suggesting the bullish momentum is to be prolonged today. The Sterling has the potential to reach the 1.46 major level and encounter resistance in face of the Bollinger band around 1.4618. However, risks of the GBP/USD retesting the support trend-line circa 1.4350 also persist, depending on Yellen’s testimony later today.
Traders’ Sentiment
Confidence in the Pound keeps rising, with 57% of all positions now being long, whereas the share of buy orders surged from 44 to 49%.
USD/JPY: market turmoil remains
“Japanese individual investors don't look like they will be bullish on the dollar and bearish on the yen any time soon, as far as recent market moves go.”
- Gaitame.com Research Institute (based on Reuters)
Pair’s Outlook
The USD/JPY settled in front of the immediate support cluster yesterday, managing to partially recover from the daily low of 114.20. Demand for safe-haven assets such as the Yen remains high, thus, we could expect a breach of the immediate support, with the second target to limit the losses being the monthly S2 at 113.88. Nevertheless, a hawkish tone of the Fed’s governor today could provide sufficient impetus for the bulls to push the Greenback back over the 116.00 mark.
Traders’ Sentiment
Almost three quarters (74%) of traders are now short the Buck, compared to 73% on Tuesday. Meanwhile, the portion of orders to acquire the US Dollar declined significantly, namely from 60 to 47%.
Gold is contained by October 2015 high
“We suspect her [Yellen’s] remarks will come across as unusually dovish, allowing the dollar to resume its descent and giving commodity markets a bit of a lift late in the day on Wednesday.”
- INTL FCStone (based on CNBC)
Pair’s Outlook
The seven-day long rally of the bullion was ultimately limited by the 1,191/93 resistance area, where gold met the October high of the previous year and weekly R1. We are closely watching this supply, because any market turmoil may end up with violation of these levels. In this case, the long traders will immediately expose the next resistance at 1,207/13 represented by the upper Bollinger band, monthly R3 and weekly R2. Gold will have a good chance to commence a down-leg from here, even though there are few fundamental signals the current growth phase is over.
Traders’ Sentiment
After falling below the 50% threshold for the first time in more than a year, the share of bullish market participants on the SWFX market remains at 43%.
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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