Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
Gravestone doji in EUR/USD chart
“More investors are starting to believe that the Federal Reserve could delay lift-off until 2016 and this view is weighing heavily on the currency.”
- BK Asset Management (based on CNBC)
Pair’s Outlook
After the yesterday’s session we now have an additional bearish signal, which is a gravestone doji. We expect the resistance at 1.14 to withstand the buying pressure and send the price lower. The nearest significant support is 1.13, represented by the weekly pivot point. This level, however, is unlikely to underpin the pair. EUR/USD should bottom out lower. The first potential reversal point will be the monthly PP at 1.1250, followed by the 55-day SMA at 1.12.
Traders’ Sentiment
The difference between the longs (47%) and shorts (53%) did not reach a significant level—the sentiment remains neutral. There is no more a large gap between the buy (54%) and sell (46%) orders as well.
GBP/USD still glued to 1.53
“More investors are starting to believe that the Federal Reserve could delay lift-off until 2016 and this view is weighing heavily on the currency, this could be another painful week for the greenback.”
- BK Asset Management (based on CNBC)
Pair’s Outlook
The Cable appears to have entered a consolidation period, as it keeps gravitating towards the 200-day SMA. This trend is yet to be confirmed by the Sterling’s possible decline towards the monthly PP around 1.53 today. A correction is likely to take place, but a number of fundamentals could strengthen the Pound over the day, thus, extending the GBP/USD’s rally. Immediate resistance lies above 1.54, represented by the weekly R1 and 55-day SMA. A rebound is possible due to the pair being supported by a strong cluster and a weaker US Dollar on increased Fed rate hike uncertainty.
Traders’ Sentiment
More than a half (61%) of traders retain a positive outlook towards the Cable, while 57% of orders are to buy the GBP (down from 60%).
USD/JPY to drop under 120.00
“The general consensus seems to be for stronger yen, but there's no event on the horizon that's going to knock it out of its range for the moment.”
- State Street Global Markets (based on Reuters)
Pair’s Outlook
The weekly PP and 20-day SMA failed to provide sufficient support in order to help the Buck outperform the Yen. As a result, the USD/JPY lost 14 pips and risks falling even deeper down today, as the mixed Chinese data boosted the Japanese currency. Furthermore, several Fed officials backed the Fed rate hike delay view, weakening the Greenback even more. The monthly PP is now the immediate support, but a cluster around 119.70 is stronger. Meanwhile, technical studies are giving bearish signals, also suggesting the Buck is to suffer more losses today.
Traders’ Sentiment
There are now 74% of long positions, compared to 71% yesterday. The portion of purchase orders also increased, from 59 to 65%.
Gold hesitates near August high
“You have the lower interest rates and you have the dollar story. They have a double impact because lower interest rates are usually supportive for precious metals and at the same time the weaker dollar is as well.”
- ABN Amro Bank NV (based on Bloomberg)
Pair’s Outlook
For the time being the precious metal is struggling to recover in the vicinity of the August high. Apart from the solid resistance here, we also have a dense supply area circa 1,180, which is a key to the May low and a multi-year down-trend at 1,230. Accordingly, as long as 1,180 is intact, the bias will remain bearish with a focus on the rising support line that connects lows of the last four months. Still, we should not forget the monthly R1 and 100-day SMA at 1,150 and 1,140 respectively that are highly unlikely to let the price fall sharply in case of a sell-off.
Traders’ Sentiment
For almost a month now neither bulls (52%) nor bears (48%) are able to take the dominant position in the market, and the sentiment stays nearly perfectly neutral.
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.
Recommended Content
Editors’ Picks
AUD/USD remains firm above 0.6600 ahead of RBA
AUD/USD maintains its bullish bias well and sound on Monday, extending the multi-session recovery past the 0.6600 barrier ahead of the key interest rate decision by the RBA.
EUR/USD keeps the constructive tone near 1.0800
EUR/USD started the week in a positive note amidst the Dollar’s inconclusive price action, altogether motivating the pair to attempt a move to the proximity of the 1.0800 region, where the 200-day SMA also converges.
Gold holds on to modest gains around $2,320
Gold trades decisively higher on the day above $2,320 in the American session. Retreating US Treasury bond yields after weaker-than-expected US employment data and escalating geopolitical tensions help XAU/USD stretch higher.
Bitcoin price holds above $63K as MicroStrategy tops BTC ownership list
Bitcoin (BTC) price recorded a rather bold two days this past weekend in a surge that saw millions in positions liquidated. However, the week is off to a calm start with altcoins sucking liquidity from the BTC market.
Stagflation warning: Service economy contracts as prices rise
In another stagflation warning sign, the U.S. service sector contracted in April even as service prices rose. The Institute for Supply Management's non-manufacturing PMI dropped to 49.4 in April, dipping from 51.4 in March.