Technical Analysis

EUR/USD breaches weekly PP to boost outlook

EURUSD

“This [housing starts] result should take some steam out of the positive surprises that markets have gotten out of U.S. data of late and help keep the dollar on the defensive.”

- Canadian Imperial Bank of Commerce (based on Bloomberg)

  • Pair’s Outlook

    Even though the volume of trading for the EUR/USD cross remained broadly flat for a third day on Tuesday, it did not stop the bulls from pushing the pair up by 46 pips. The Euro successfully dealt with the weekly pivot point, thereby switching attention to the 1.1460 mark. Here the bulls will find the September 2015 peak and the current April high along with the Feb-April uptrend line. Medium-term dips will be consequently allowed to extend down to the 1.12 mark where the nearest massive cluster of supports consists of the monthly pivot, weekly S1 and 55-day SMA.

  • Traders’ Sentiment

    On April 19 this SWFX distribution between long and short positions has gained enough power to change and the bulls were sent down to 41%, meaning the gap has expanded to 18 pp by Wednesday morning.

GBP/USD attempts to climb over 1.44

GBPUSD

“A vote to leave the EU might result in an extended period of uncertainty about the economic outlook, including about the prospects for export growth. This uncertainty would be likely to push down on demand in the short run.”

- Mark Carney, Governor of Bank of England (based on WBP Online)

  • Pair’s Outlook

    The Us currency weakened on Tuesday, allowing the British Pound to take the upper hand once more and reach the 1.44 mark over the day. A break out of the falling wedge pattern implied that more bullish momentum was likely to follow, with the Cable aiming towards the resistance line at 1.45. Today only one resistance cluster separates the GBP/USD currency pair from reaching that goal, formed by the Bollinger band, the 100-day SMA and the weekly R2. However, we should not rule out the possibility of the exchange rate returning below 1.4350, with the nearest support represented by the weekly R1.

  • Traders’ Sentiment

    Market sentiment remains bullish, but taking up 56% of the market, compared to 57% yesterday. At the same time, the portion of orders to acquire the Sterling increased from 36 to 59%.

USD/JPY: downside risks persist

USDJPY

“Direct currency intervention remains a threat at below 105 yen levels. Yet the BoJ must tread lightly as unsuccessful action will only erode their credibility, which is critical in policy setting.”

- Swissquote (based on Reuters)

  • Pair’s Outlook

    Even though the US Dollar managed to take advantage of risk appetite and outperform the Japanese Yen on Tuesday, risks of the pair edging lower today persist. First of all, technical indicators retain their bearish signals, bolstering the possibility of the negative outcome; second, the USD/JPY currency pair was unable to reconquer the 109.50 level, which kept the Buck pressured ever since the first rebound from the 18-month low occurred. Nonetheless, the monthly S2 and the weekly PP form a rather strong support cluster at 108.70, where dips are likely to be limited if the bearish momentum prevails.

  • Traders’ Sentiment

    Once again 73% of traders have a positive outlook towards the Greenback (previously 70%). Meanwhile, the number of orders to acquire the USD slightly declined, but still takes up 70% of the market.

Gold confirms 1,241 from second attempt

Gold

“A repricing of Fed tightening expectations is therefore likely in the second quarter. The subsequent increase in US nominal and real interest rates could dampen investment demand and therefore gold prices.”

- FastMarkets (based on The Bullion Desk)

  • Pair’s Outlook

    The bullion grabbed benefits from weaker US Dollar on Tuesday, by soaring the most in a week to close at 1,250. Backed by the 55-day SMA, currently at 1,231.56, gold surged as high as the first weekly resistance at 1,256.06, which managed to contain the upward pressure. Now the spot is located above the monthly pivot (1,241.50) and the outlook is improving. The key bullish goal is present April peak at 1,262.70, which is immediately followed by the February high at 1,263.43. Also, the bullish case is expected by the aggregate daily technical studies.

  • Traders’ Sentiment

    The rally of yesterday forced some major profit taking and the percentage of bullish SWFX traders bounced back to 40%, down from 45% a day ago.

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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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