Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD returns to 1.10 ahead of ECB week
“I don’t think the ECB will disappoint.”
- AllianceBernstein (based on Bloomberg)
Pair’s Outlook
EUR/USD booked another bullish trading session last Friday, with gains extending beyond the 55-day SMA at 1.0972. After touching the 200-day SMA at 1.1045, the pair was forced to come back and finished the week at 1.10. The exchange rate will be turbulent this week, as the ECB decision approaches on March 10. Growth above the 200-day SMA will expose the first monthly resistance line at 1.1272, followed by the February peak at 1.1377. The bears, however, will be hoping for a reverse of the current tendency, as they are aiming at the February low of 1.0809.
Traders’ Sentiment
Over the weekend the SWFX market sentiment worsened quite significantly, as the total percentage of bullish market participants slid from 53% to 48%. Pending orders also remain 51-53% Euro-short.
GBP/USD risks falling back under 1.42
“The higher the pound moves on improving risk sentiment, the more likely "Brexit" developments will begin to weigh on sentiment again. So we see limited upside for the pound from here.”
- Bank of Tokyo-Mitsubishi (based on Business Recorder)
Pair’s Outlook
Despite weak UK data, the GBP/USD currency pair managed to recover from its daily low and end the week with five consecutive rallies. If the Sterling succeeds in preserving its current bullish trend, the exchange rate could reach the 1.49 mark within two months; however, technical studies in all timeframes suggest otherwise. Meanwhile, the closest resistance is located only around 1.4415, represented by the 55-day SMA, the weekly and the monthly R1s. The 20-day SMA, on the other hand, is supporting the Cable just below the opening price, while another strong cluster is located around 1.4125, which should limit the dips, as price is expected to drop lower over the day.
Traders’ Sentiment
Today 56% of all open positions are long (previously 52%), whereas the share of purchase orders increased from 37 to 52% over the weekend.
USD/JPY keeps struggling to overcome 114.00
“The scale of drop in USD/JPY is limiting the upside now that financial market conditions have improved but a slow grind higher is possible if broader market conditions remain favourable.”
- BTMU analytic team (based on WBP Online)
Pair’s Outlook
The US Dollar failed to post significant gains against the Japanese Yen last Friday, as the USD/JPY pair inched only five pips higher. Although the given pair opened slightly higher today, resistance at the 114.00 psychological level appears to be holding the Buck at bay. However, the Greenback is now also supported by the weekly PP and the 20-day SMA around 113.40, where demand could be sufficient to trigger a buying spree for the 114.00 mark to be overcome. According to technical indicators, the bearish momentum is likely to prevail and push the US currency closer towards 113.00 major level.
Traders’ Sentiment
Bullish market sentiment returned to its last Monday’s level of 70%, compared to 75% on Friday. At the same time, the number of orders to acquire the American Dollar increased from 57 to 62%.
Gold eases from multi-month peaks
“Gold prices broke higher yesterday and we wait to see if they gather momentum, given other markets are seeing risk-on we would not be surprised to see gold prices struggle.”
- Bullion Desk (based on The Week)
Pair’s Outlook
US Dollar strengthened after encouraging employment data from America. Gold peaked at 1,280 on Friday, but came under selling pressure by week-end and finished it slightly below 1,260. Bullish development remains on top of the medium-term agenda, backed by the February uptrend line, currently at 1,229, and the weekly pivot point at 1,251. Moreover, weekly indicators are long on the bullion for the moment. The first target area for the bulls is 1,290 guarded by weekly/monthly R1s. Only a drop below 1,221 (20-day SMA) will erode the positive outlook.
Traders’ Sentiment
The number of bullish traders in the SWFX market is back to 41% by Monday morning, meaning over the weekend their portion decreased by only one percentage point.
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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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