Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD to end the week in tranquil trading
“He [Mario Draghi] is going to pull a rabbit out of the hat -- we’re just not sure what that rabbit will be. The euro is going down heavily.”
- BMO Global Asset Management (based on Bloomberg)
Pair’s Outlook
EUR/USD continued to trade in a tight range on Thursday, owing to lack of major fundamental and technical drivers throughout the day. Closest support, namely the weekly S1 at 1.0586, is not considered as a very strong one. However, it may succeed in containing losses on Friday amid quiet end of the working week. Yesterday the total trading volume halved and reached the lowest level since May-end, which justifies current low turbulence in the FX market.
Traders’ Sentiment
Bank Holiday in the US resulted in no change for distribution between bullish and bearish positions, which holds at 51-49%. As for the pending orders, 47% of commands are set to buy the Euro in 100-pip range, down one percentage point from yesterday.
GBP/USD gravitates towards weekly S1
“With commodity prices coming under renewed downward pressure, the Bank of England may well find it difficult to hike rates in 2016. Put simply it looks to us as if 2016 will be the year that sterling finally loses its shine.”
- Bank of New York Mellon (based on Business Recorder)
Pair’s Outlook
The Sterling made its way closer to the Nov low yesterday, by falling towards the major level of 1.51 against the US Dollar. The Cable appears to be glued to the weekly S1 level and refuses to drop below 1.5075 this week, suggesting that the exchange rate could edge approximately 25 pips higher today. Although technical studies are bolstering this outcome with their bullish signals, the downslide might be extended with the weekly S2 and the Nov low acting as the nearest support around 1.5035.
Traders’ Sentiment
The outlook towards the GBP/USD improved again today, with 54% of all positions being long (previously 53%). The share of sell orders barely changed over the day, taking up 57% of the market.
USD/JPY stuck around 122.50
“We also expect JPY selling by domestic investors/businesses to continue. We do not expect Japanese policymakers to react very negatively if JPY weakens to the 130 level […].”
- Nomura Bank (based on FXStreet)
Pair’s Outlook
On Thursday the US Dollar edged lower against the Japanese Yen, somewhat breaching the up-trend. As a result, price opened further away from the up-trend and risks falling even deeper down, as the 20-day SMA at 122.57 is currently weighing on the pair. The nearest target to limit the dips is around 122.05, represented by the weekly S1 and monthly R1, but technical indicators keep giving bullish signals. The nearest resistance in face of the weekly PP remained unconquered through all of the week and is expected to prevent the USD/JPY from recovering.
Traders’ Sentiment
Bears remain in the majority, as 73% of traders are short the Buck. Meanwhile, the portion of buy orders increased from 56 to 63%.
Gold sees no value change during Thanksgiving
“Once again, gold is unable to find a bid. Any small rally that we see is being sold into.”
- Sydney-based precious metals trader (based on CNBC)
Pair’s Outlook
The bullion was literally unchanged in price on Thursday, which is explained by US Bank Holiday and low volatility in both commodity and FX markets. Price opened and closed just above July low at 1,070. On Friday morning we see some downward activity taking place, but we expect the overall daily trading range to stay quite narrow. In any case, gold is required to trade below July low for two consecutive days, in order to confirm this support. Trading volume crashed 2.5 times since last week's peak and will support light trading in the near term.
Traders’ Sentiment
Market sentiment with respect to gold remains strongly positive for the moment. More than 72% of SWFX traders are holding long positions, no change in the past 24 hours. However, risks are skewed to the downside as gold seems to be overbought.
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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