Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD ready to return back below weekly PP
“A further selloff in the dollar should be limited as we have the ECB meeting coming up where Draghi is expected to provide more stimulus.”
- Australia & New Zealand Banking Group Ltd (based on Bloomberg)
Pair’s Outlook
Yesterday the EUR/USD cross rallied by 67 pips during the trading session, which ended strongly in favour of the bulls. Temporary support for the Euro was coming from the disappointing US statistics. We expect the market to refocus back to the ECB meeting. A slump below 1.0615 (weekly PP) is quite likely on Wednesday. Mid-term bearish targets remain unchanged, represented by the cluster of supports at 1.0552/19. Meantime, any advance past the weekly R1 (1.0665) will meet a strong resistance in face of monthly PP, 20-day SMA and weekly R2 at 1.0711/39.
Traders’ Sentiment
The bullish portion of SWFX open positions accounts for just 45% on Wednesday, down from 49% yesterday. Meanwhile, 100-pip pending orders have a minimal bearish advantage of 52%.
GBP/USD on the edge of dropping to a fresh 7-month low
“We have been cautious about extending USD long positions ahead of the Fed, wary that the USD could give back ground if the Fed stresses caution and FX headwinds in their press conference.”
- BNP Paribas (based on Business Recorder)
- Pair’s Outlook
The US Dollar weakened against the Sterling on Tuesday, amid the US ISM Manufacturing PMI showing signs of contraction. However, the weekly PP prevented any substantial gains, despite the Cable’s attempts to climb over 1.51. The same resistance is likely to cause the pair to bounce back and technical studies are supporting this outcome. Meanwhile, the Nov low at 1.5026 remains the closest demand, but in wake of fundamental data the GBP/USD could fall towards the second target, namely the cluster around 1.4985.
Traders’ Sentiment
Traders are equally divided between the bulls and the bears today. The number of orders to sell the British Pound added three percentage points, rising to 56% in the 100-pip range from the spot.
USD/JPY gravitates towards 123.00
“A dramatic pull-back in GPIF-related outflows from Japan, plus continued retail investor caution in circumstances of a rapidly expanding current account surplus will act to limit yen weakness from here.”
- Bank of Tokyo-Mitsubishi UFJ (based on WBP Online)
Pair’s Outlook
Weak US fundamentals and a stronger Yen pushed the USD/JPY back under 123.00 yesterday. The immediate support cluster, however, managed to hold the losses, while the pair appears to be consolidating between 122.70 and 123.30 this week. Technical indicators keep showing a rally is due, with the exchange rate returning above the major level of 123.00. The up-trend, on the other hand, might not be reached, unless the US currency receives a strong boost in order to pierce 123.20—where the up-trend coincides with the weekly R1.
Traders’ Sentiment
Market sentiment is recovering, with 71% of all positions still short (previously 72%). The share of buy orders edged up from 67 to 72%.
Buoyant Dollar rejects gold's rally beyond July low
“The U.S. dollar has come off its highs which it made recently, that has been the main reason supporting gold.”
- Kotak Commodity Services Ltd (based on Bloomberg)
- Pair’s Outlook
XAU/USD's advance was prolonging up to the weekly R1 at 1,074 on Tuesday. However, the bearish pressure was rising over time, even despite fairly pessimistic US manufacturing data. Main focus, which is shifting back to the Fed, did not prevent the bullion's cooldown by the end of trading. Therefore, our outlook is unchanged with the "negative" status. Initially, the metal is required to reclaim the 1,063 mark, which is safeguarded by the weekly pivot point. Meanwhile, trading volume spiked to the highest level since Nov 20, meaning volatility is on the rise.
Traders’ Sentiment
By Wednesday morning, 74% of SWFX traders are holding long positions, showing a recovery of circa four p.p. since yesterday. At the same time, this distribution reveals that gold is too overbought and long term risks are skewed to the downside.
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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