Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD continues eyeing 1.1115/00
“I regard it as unwise to continue a normalization strategy in an environment of declining market-based inflation expectations.”
- James Bullard, St. Louis Fed President (based on Bloomberg)
Pair’s Outlook
In general the pair is hovering on the downside, while closely monitoring the nearest support zone at 1.1115/00 represented by the monthly R2, weekly S1 and 20-day SMA. Alongside, these levels are all strengthened by the September low and 200-day SMA at 1.1087/51. Such a state of affairs may cause a short-term revival in the direction of the 1.1238/46 area, also given that daily indicators maintain the confident bullish outlook. Beyond today, however, we see EUR/USD struggling to cope with selling pressure.
Traders’ Sentiment
There is a ten percentage point negative gap between the long and short participants in the SWFX market. However, pending orders are mainly set to acquire the 19-nation currency against the Dollar, in 52% of all cases for both 50 and 100-pip ranges from the spot price.
GBP/USD takes another shot at edging above 1.43
“The Fed remains data dependent and so upcoming gauges of U.S. inflation, wages and jobs gains will be very closely watched. As it stands now, the market may be pricing in an overly negative economic scenario that results in no further rate hikes this year.”
- Commonwealth Foreign Exchange (based on CNBC)
Pair’s Outlook
The Cable was able to almost completely recover from its intraday loss, as the FOMC minutes were interpreted as dovish. The weekly S2 at 1.4255 keeps providing immediate resistance and is likely to prevent the GBP/USD from edging lower. However, technical studies remain in favour of the bullish scenario, implying the Sterling could remain above the 1.43 major level. Meanwhile, the closest area to limit the gains is located just under the 1.44 mark, but is unlikely to be reached today.
Traders’ Sentiment
Today 58% of all open positions are long, compared to 63% on Wednesday. At the same time, the number of orders to acquire the Sterling increased from 52 to 56%.
USD/JPY struggles to stay above 114.00
“If broader risk aversion is steadying, as we suspect, we have to think the yen is at risk of giving back more of its recent strength.”
- Scotia Capital (based on Reuters)
Pair’s Outlook
The US currency remained unchanged against the Japanese Yen on Wednesday, as demand at 113.88 proved to be sufficient to keep the pair elevated. Technically, we might see a rebound, with the exchange rate touching the 115.00 level. The nearest resistance leaves enough room for a rally beyond 116.00; however, impetus to push the pair that high is absent. Nonetheless, the Buck lacks the strength to exit its current bearish trend, while daily and weekly technical studies keep giving bearish signals, suggesting the USD/JPY currency pair is to attempt and breach the immediate support area.
Traders’ Sentiment
Traders’ sentiment keeps improving, with 69% of traders being long the Buck, while the share of buy orders skyrocketed from 23 to 68%.
Gold lacks stronger upside momentum
“With the uncertainty in the global economy and the relatively dovish Fed minutes that were out yesterday, gold prices will still be supported above $1,200.”
- OCBC Bank (based on CNBC)
Pair’s Outlook
The daily chart has been showing mixed signals for several days in a row. Gold tested the third monthly resistance (1,209) yesterday, but ultimately closed the session below it. By succeeding here, the bulls will be in a position to prolong gains to 1,221 (weekly PP) over the next 24 hours. We cannot rule out the bullion will fail in the vicinity of this supply. An attempt of attacking October high (1,191) is possible, even though daily indicators tend to oppose bearish scenario. Below 1,190 would reassure us a correction is on the table.
Traders’ Sentiment
We observed the bullish share of open positions bouncing off the lowest level in at least two years. It grew to a third from only 27% about 24 hours ago.
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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