Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD opens lower at 1.073 on Monday
“The events in Paris on Friday would have diverted funds away from risky assets -- including, in this case, the euro.”
- Macquarie Bank Ltd. (based on Bloomberg)
Pair’s Outlook
On Friday the Euro resumed sliding down and reached the monthly S1 at 1.0768 by the end of trading, even though the lead of bears was extending as low as 1.0713. On Monday EUR/USD opened lower amid impactful political background in Europe. Nonetheless, we expect a sideways development throughout the whole session in the beginning of this week. Mid-term sentiment has a bearish bias, with short traders targeting the Apr low at 1.0519. In this case, at first the recent low (Nov 10) at 1.0673 should be crossed to confirm those downside intentions.
Traders’ Sentiment
Bulls raised their share to 55% by Monday morning, the highest level in almost 15 weeks. Pending orders, however, deteriorated to just 39% for bulls in 100-pip range from the spot market price.
GBP/USD refuses to fall under 1.52
“Risk aversion is on the rise and we are seeing broad-based U.S. dollar strength across the board and this may continue until the year end as recent economic data has also disappointed.”
- Barclays (based on Reuters)
Pair’s Outlook
After testing the 23.60% Fibo, the GBP/USD recovered from intraday losses due to disappointing US fundamentals. Although the pair remained relatively unchanged over the day, a correction is expected to take place today. The 23.60% Fibo, monthly S1 and weekly PP continue to form the support cluster around 1.5185, but the 1.52 psychological level might also contribute to holding the dips today. Meanwhile, technical studies are giving distinctly bearish signals, bolstering the possibility of the negative outcome.
Traders’ Sentiment
The gap between the bulls and the bears narrowed, as 56% of all positions are short and the remaining 44% are long. At the same time, the share of sell orders added an extra 2% points, up to 61%.
USD/JPY rises on risk aversion
“Our stance is that the BOJ and the government are comfortable with where the yen is. Unless there's a significant deflationary shock in the form of a very strong currency or a significant decline in equities, their inclination is to hold [the QE].”
- HSBC (based on CNBC)
Pair’s Outlook
Even though the USD/JPY currency pair’s exchange rate barely changed on Friday, despite weak US fundamental data, a 34-pip drop occurred over the weekend. The Greenback appears to be determined to recover from a full week of losses, with the nearest resistance located only at 122.87, namely the weekly PP. The monthly R1 and weekly S1 are forming a demand area around 122.10, which with the bullish technical indicators are increasing the US Dollar’s chances of closing near the Friday’s opening price.
Traders’ Sentiment
The share of short positions remains rather high at 74% (75% on Friday), whereas the portion of orders to acquire the US currency declined from 74 to 54%.
Gold climbs past 1,095 on Japan's GDP data
“Safe-haven buying following the terrible events in Paris over the weekend has taken gold higher this morning.”
- MKS Group (based on CNBC)
Pair’s Outlook
Very few fundamentals, other than US ones, are usually able to drive the bullion substantially. However, today an exception was made for Japan, where economy entered a technical recession. Gold is recovering from last week's lows of 1,084 and is trading close to the 1,100 mark at the moment. This important psychological level and monthly S1 should manage to cap a rally in the short term. Our medium term expectation remains fairly bearish and main focus is on July low at 1,070. On the other hand, any gains above 1,100 will therefore intend to retake Nov 5 high at 1,111 next.
Traders’ Sentiment
Market sentiment with respect to gold remains strongly positive for the moment, being that 72% of SWFX traders are holding long positions, up one percentage point over the weekend.
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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