Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD gets bullish momentum from 1.1115
“If inflation is slower to return to target, monetary policy normalization should be unhurried.”
- Eric Rosengren, Boston Fed President (based on Bloomberg)
Pair’s Outlook
EUR/USD was largely unchanged over Tuesday after two days of sharp losses. A sell-off is now being contained by the immediate cluster of supports at 1.1115/00. Here we have the monthly R2, which is guarded by the first weekly demand and 20-day SMA. We expect a recovery to take place shortly, given that daily technical indicators are also strongly pointing to the North. Moreover, in any case the bears are likely to fail at the 1.1052 mark represented by the 200-day SMA. The first bullish goal is intact – the 1.1238/46 area (weekly PP; monthly R3).
Traders’ Sentiment
Advantage of short market participants over bullish traders returned to ten percentage points, while yesterday there was a 12 pp gap between them.
GBP/USD tests water under 1.43 ahead of labour data
“Rebounding risk appetite should ease global funding concerns working in favour of current account deficit FX such as the pound.”
- Morgan Stanley (based on Reuters)
Pair’s Outlook
Yesterday disappointment in UK’s inflation outlook pushed the GBP/USD significantly lower, with the four-week up-trend failing to hold the losses. The Sterling is expected to recover after such a gradual fall, as technical indicators are once again giving bullish signals. Lower unemployment is to boost the Cable, with the closest area to limit the gains located only around 1.4385. However, since the GBP/USD is on the backfoot, we might also observe another slump beyond the immediate support of 1.4255, especially if the fundamental data is in favour of the American Dollar.
Traders’ Sentiment
The share of long positions now takes up 63% of the market (previously 60%), while the buy order portion slid from 65 to 52%.
USD/JPY under the risk of erasing last week’s gains
“Dollar/yen will continue to watch movements in risk assets like crude oil and equities, for direction. During 'risk off' phases the yen continues to show the strongest reaction. The dollar approached the 115 yen threshold recently and this also makes it easier for participants to sell the currency.”
- Barclays (based on CNBC)
Pair’s Outlook
The USD/JPY currency pair’s sell-off was limited by the immediate support cluster yesterday, however, it is uncertain whether the cluster will succeed in doing so again today. Technical studies retain their bearish signals, while the risk-off sentiment returned to the markets after another Yuan devaluation by the PBoC. The Yen now has the upper hand against the Buck and could push the pair all the way down to the 112.00 level, which in turn is bolstered by the monthly S3. On the other hand, if bulls manage to take over, the US Dollar could then successfully retake the 115.00 major level.
Traders’ Sentiment
Today 67% of traders retain a positive outlook towards the USD, whereas the number of purchase orders plunged from 51 to 23%.
Gold in limbo around 1,200
“Fears around China, oil and negative interest rates have likely been overstated in the gold price and other financial markets.”
- Goldman Sachs (based on Reuters)
Pair’s Outlook
Tuesday was a mixed day for the bullion, as neither the bulls nor bears were managing to take a full control over the price. However, by the end of US session the latter were able to fix a red candle with the spot precisely at the 1,200 mark. The bears are still watching the Oct 2015 high at 1,191 that was briefly touched yesterday. The second support is the weekly S1 at 1,180. In the meantime daily technicals preserve the bullish bias, as they see the monthly R3 (1,209) being reclaimed over the next 24 hours. Bullish success here will potentially expose the weekly pivot point (1,221) as the second daily supply.
Traders’ Sentiment
Losses for the bullish side in the SWFX market were extended throughout the second day of this week, as their share slid to 27% from 31% a day before.
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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