Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD's gains capped by monthly S1 at 1.0768
“The dollar is pausing from its rally as markets may have raced ahead on Fed rate hike expectations for December.”
- Ueda Harlow Ltd. (based on Bloomberg)
Pair’s Outlook
On Monday the most traded FX cross has tried to recover Friday losses, but it failed to come back at least above 1.0750. In addition to that, important bearish support was provided by the monthly S1 at 1.0768. We do not expect a rally to prolong any further in the medium term, while stronger US Dollar will weigh on this currency pair. In the near term bearish pressure is also likely to remain limited, owing to lack of fundamental drivers on Tuesday. Bears are focused on Apr low at 1.0519, followed by March low at 1.0461.
Traders’ Sentiment
On Tuesday bulls and bears are holding the equal number of open positions in the SWFX market. Pending orders in 100-pip range, however, are set to sell the Euro in 66% of all cases.
GBP/USD to take another step towards down-trend
“We think USD gains have further to run, but with the Fed also sensitive to headwinds created by currency strength, we think gains are likely to be limited in scope.”
- BNP Paribas (based on Business Recorder)
Pair’s Outlook
Yesterday the Cable managed to return above the 1.51 level, thus, stabilise above the September low. Although the British currency still has a lot of ground to cover between the spot price and the down-trend being retested, there are currently two clusters (around 1.5195 and 1.5340) that might prevent that from happening. The second group of levels is much stronger and is likely to be reached next week, when it will coincide with the resistance trend-line. Meanwhile, the GBP/USD is aiming for the 23.60% Fibo target, which is expected to be reached within the next two days.
Traders’ Sentiment
The shares of both the sell orders and short positions increased, to 60% and 55% of the market, respectively.
USD/JPY remains at multi-year highs
“The U.S. is out in front on its own, and everyone else is heading the other way. In that case, positioning becomes very key, if the interest-rate story is going to be center-stage.”
- State Street Global Markets (based on Reuters)
Pair’s Outlook
The Buck kept hovering over the 123.00 major level, as the Bollinger band and the monthly R2 prevented the USD/JPY from leaving the tight range. However, the two levels are now forming a single resistance around 123.45, hence, risks of edging lower are higher. Nonetheless, technical indicators retain their bullish signals, suggesting the pair could overcome the immediate resistance. At the same time, the nearest support lies only around the 122.00 mark, but an event to weigh the Greenback down that much is absent today; therefore, the base case scenario is a fall to 122.80.
Traders’ Sentiment
There are now 73% of traders being short the US Dollar, whereas 58% of all commands are to sell it (previously 59%).
Gold rose for first time in nine days
“Gold will stay below $1,100 as the interest rate hike becomes more and more imminent.”
- Wing Fung Financial Group (based on CNBC)
Pair’s Outlook
Gold spent Monday trading session by attempting to revive after Friday's slide to 1,090. However, price gains were extremely limited due to pressure created by Dollar bulls. On Tuesday we expect changes to remain largely muted amid quiet fundamental data calendar. In the medium term the bearish pressure is highly likely to resume, especially as we are going to approach the Fed's December meeting. Bears are targeting the Jul low at 1,070 and monthly S2 at 1,059 afterwards. For the bearish outlook to be eroded, bulls should push the price back above the 1,105 mark.
Traders’ Sentiment
Following a slight rebound of prices on Monday, the total percentage of bullish positions decreased from 57% to 56% in the SWFX market. However, this level falls just one percentage point short of the highest reading in the past seven 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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