Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD risks falling from 8-month downtrend
“The fact that they didn’t raise rates and wound back expectations for future increases in 2016 has obviously hurt the U.S. dollar.”
- Rochford Capital Pty (based on Bloomberg)
Pair’s Outlook
EUR/USD rallied for a second day in a row on Thursday, owing to weaker US Dollar in the wake of dovish Fed decisions a day before. As expected, the currency pair eroded the weekly R1 and surged to the August-March downtrend at 1.1320. This one is guarded by another downtrend (October-March) at 1.1345, and success here would allow for an advance beyond the February peak of 1.1377. Daily technical indicators are mixed, but probability of a setback increases. However, support zone below 1.1060 continues to guard the pair from a long-term selloff.
Traders’ Sentiment
For the moment precisely four out of ten SWFX market participants are holding long positions on the Euro, down from 41% yesterday and 42% on Wednesday.
GBP/USD struggles to retake 1.45
“We think the market holds its shortest sterling exposure since 2008 -- that is since the financial crisis.”
- BNP Paribas (based on Bloomberg)
Pair’s Outlook
On Thursday the Sterling skyrocketed against the US Dollar, meeting resistance only at the third target, namely weekly R1 at 1.4510. However, the Cable closed below the 1.45 major level and is likely to struggle to pierce it again today, as the weekly R1 and the Bollinger band still form a rather strong resistance area around 1.4515. Technical indicators, on the other hand, insist that the immediate resistance is to be pierced. A breach is possible if demand at 1.4446, represented by the monthly R1, is sufficient to cause a rebound, but due to lack of impetus, is unlikely to occur.
Traders’ Sentiment
Market sentiment shifted to the bearish side, as 52% of all open positions are now short, compared to 40% yesterday. The number of sell orders also increased, from 55 to 59%.
USD/JPY attempts to begin recovery
“At 113, the BoJ has leeway to wait but at 110-111 with the risk of further losses, they may not be able to forestall easing for much longer.”
- Kathy Lien, BK Asset Management (based on CNBC)
Pair’s Outlook
The USD/JPY currency pair slumped for the fourth consecutive day yesterday, retaining its post-Fed weakness. The 112.00 psychological level failed to hold the losses, but the weekly S2 at 111.28 succeeded. This support could keep the US Dollar afloat today, but technical indicators retain mixed signals, suggesting that either outcome is possible. Technically, we should see a rebound, as a drop below 111.00 might cause the BoJ to intervene. The Bollinger band just above the opening price is the only obstacle on the pair’s path towards retaking the 112.00 level.
Traders’ Sentiment
Although not as strong as yesterday, but market sentiment remains bullish at 71% (previously 74%). At the same time, the portion of purchase orders dropped dramatically, namely from 64 to 35%.
Gold in limbo between Feb high and weekly PP
“Gold is finding support at $1,260, it is reluctant to go below that level and it is mainly due to weaker U.S. dollar.”
- Phillip Futures (based on CNBC)
Pair’s Outlook
Gold's intraday gains were extending beyond the 1,270 mark on Thursday, but the bears consolidated their power and made prices suffer. Ultimately, the bullion was down to the weekly pivot point near 1,257. Given important uptrend line (1,240), which has not given up to bearish pressure on Tuesday-Wednesday, our short-term outlook is positive and a recovery is highly likely. The key watch is on another upward-sloping trend-line at 1,287. This is the level where the bullion is forecasted to fail eventually, provided it is now developing inside the rising wedge pattern.
Traders’ Sentiment
Bullish side lost eight percent from Thursday morning until today, down to only 30%. This is the worst sentiment with respect to the yellow metal in about three weeks.
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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