Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD resumes falling as ECB meeting begins
“It seems some investors are moving their positions ahead of the ECB meeting.”
- Bank of Tokyo-Mitsubishi UFJ (based on MarketWatch)
Pair’s Outlook
Daily technical indicators assume the EUR/USD currency pair will come under a heavy selling pressure on Wednesday when the ECB’s two-day meeting starts. Yesterday the cross was denied by the 200-day SMA at 1.1043. The bears are setting eye on the demand cluster at 1.0974/58 where the 55-day SMA and weekly pivot point support each other. Failure here would allow for a loss down to 1.09 over the next 24 hours (100-day SMA and weekly S1), followed by the February low at 1.0809 in the long run.
Traders’ Sentiment
Driven by bullish pending commands yesterday, the total number of long SWFX traders rose to 49% by Wednesday morning. As for pending orders themselves, today 51-54% of them are back set to go short on the common European currency against the Buck.
GBP/USD on the verge of falling back under 1.42
“We think a correction back to $1.4050 is on the cards should the Brexit risk premium resurface over the coming days.”
- ING (based on Reuters)
Pair’s Outlook
As was anticipated, the Sterling weakened against the US Dollar on Tuesday, amid BoE Governor’s remarks. Although volatility stretched beyond the immediate support, ultimately, trade closed above it at 1.4217. The outlook remains grim, as technical indicators retain their bearish signals. The Pound is poised for another decline, with the 20-day SMA failing to hold the losses this time. A drop below 1.41 major level is doubtful, as rather strong demand is located around 1.4125, represented by the weekly and the monthly PPs. However, fundamental data could still turn in favour of the Pound and, thus, push the Cable closer towards 1.43.
Traders’ Sentiment
Bullish traders’ sentiment returned to its Monday’s level of 56%. Meanwhile, the number of purchase orders slid from 59 to 39%.
USD/JPY to edge close to 112.00
“The disappointing data from China is weighing on risk sentiment and pushing the dollar lower against the yen.”
- Nomura (based on CNBC)
Pair’s Outlook
On Tuesday the risk-off sentiment sparked demand for the safe haven Yen, causing the USD/JPY currency pair to reach the second support level, namely the weekly S1. Today this area acts as the immediate support, whereas the 20-day SMA and the weekly PP form a resistance cluster around 113.35. Nevertheless, the bearish momentum is expected to prevail, but with the 112.00 psychological level limiting the dips. The Bollinger band is bolstering this area, but volatility might even edge closer to the 111.00 mark. Meanwhile, technical studies also suggest the negative outcome is most probable.
Traders’ Sentiment
Three quarters (75%) of all open positions are once again long (previously 71%). At the same time, there are 67% of all pending orders to sell the Greenback, compared to 51% on Tuesday.
Gold guided down by stronger Greenback
“While we do not believe the rally will be reversed, we suspect that…the market could use a period of consolidation.”
- HSBC (based on Wall Street Journal)
Pair’s Outlook
Ahead of the meeting of the European Central Bank the Dollar is broadly gaining ground across the board. This is putting downside pressure on gold for a second consecutive day on Wednesday. Despite that, we do not see any substantial losses and the price holds above the weekly pivot point of 1,251. A breakthrough here would neutralize our outlook on the bullion and we will see the February uptrend (1,233) back at risk of being penetrated. However, given positively-biased daily technical indicators and support lines at 1,228/23, a slide is unlikely to be long-lasting.
Traders’ Sentiment
Market sentiment in the SWFX market is changing within the margin of error on a daily basis. Over the past 24 hours the bearish share rose to 59% from 57%, therefore regaining two percentage points it had lost one 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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