Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD keeps trading in horizontal trend
“If you think you’re going to get euro-dollar significantly lower, you need to get an ECB rate cut, a Fed rate hike and some new additional impetus.”
- Kit Juckes, Societe Generale (based on Bloomberg)
Pair’s Outlook
EUR/USD has been broadly unchanged in value this week so far, owing to lack of any fundamental drivers. At the moment of writing the pair was hovering moderately below the monthly S1 at 1.0768, which acts as the closest resistance for bulls. Bears are still watching the Apr low at 1.0519, but this area is likely to be touched in the medium term. Short term perspectives are therefore remaining neutral, with rallies capped by Jul low at 1.0808 and losses contained by the 1.07 mark.
Traders’ Sentiment
SWFX bullish share advanced back to 52% by Wednesday morning. Alongside, the percentage of long pending orders in 100-pip range from the spot price increased to 43%, up from 34% yesterday.
GBP/USD tries to benefit from US bank holiday
“Markets have already concluded that the Fed will raise rates in December and I don't think the big picture has changed. I expect the dollar to strengthen further a bit towards the Fed's policy meeting (on Dec. 15-16).”
- Trader at a Japanese bank (based on Reuters)
Pair’s Outlook
The British Pound remained flat against the US Dollar on Tuesday, with the Cable rising only three pips higher. Nonetheless, the GBP/USD has already reached the expected target early today, namely the cluster around 1.5185. Strong UK fundamentals should boost the Sterling enough to pierce the cluster and stretch out to around 1.5250. On the other hand, in case the market movers are not in favour of the GBP, a fall beyond the immediate support is possible, with the 1.50 psychological level acting as the ground floor.
Traders’ Sentiment
Bears are dominating the market with 60% of traders being short the Sterling. The portion of sell commands gained four more percentage points. The orders now account for 64% of the market.
USD/JPY to weaken for the third day
“I believe the (Federal Open Market Committee) is on pace to hike come hell or high water, almost literally. They will be lifting off unless there is a real meltdown.”
- Kim Rupert, Action Economics (based on Business Recorder)
Pair’s Outlook
The USD/JPY failed to reach the 122.80 mark, while the immediate resistance cluster prevented the pair from advancing. The Greenback risks falling today as well, due to the lack of potential events to help the exchange rate climb over the resistance around 123.50. Immediate support is still represented by the weekly PP, monthly R1 and the 100-day SMA around 122.00, but the highest level of the cluster, namely the weekly PP, is the only one to be tested. In case the 100-day SMA is breached, the second strong demand area is located at 121.15—the 20 and 200-day SMAs.
Traders’ Sentiment
Bears keep pushing forward, as 74% of all positions are now short. At the same time, the share of buy orders increased from 42 to 72%.
Gold in wait-and-see mode after Monday gains
“The ETF market is suggesting more pain (for gold) in coming days.”
- ANZ (based on CNBC)
Pair’s Outlook
We do not project substantial volatility for gold prices in the nearest future, after the metal stabilized and booked first gains in nine days on Monday. Yesterday the price erased those positive changes to return back to 1,089 by the end of trading. Veterans Day and closed markets in the US will most probably keep the yellow metal in the sideways trend today, while more pronounced movements are awaited by Friday when more fundamentals will be published. In the medium term, however, we see gold losing value in the direction of Jul low at 1,070.
Traders’ Sentiment
The total number of bullish market participants in the SWFX market rose back to 57% by Wednesday morning, after experiencing a slight decrease on Tuesday to 56%. Thus, long sentiment is the highest in the past seven weeks for the moment.
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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