Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD to continue trading below 1.10
“Euro should again weaken as it becomes clear the ECB will need to do more.”
- Westpac Banking Corp. (based on Bloomberg)
Pair’s Outlook
EUR/USD cooled down on Friday, by falling from Thursday's peak at 1.0980 to reach the 1.0882 mark by the end of last week's trading. In the short term the bears are expected to aim at the weekly pivot point, which guards the July low at 1.0808/1.0795. Consolidation below this area should pave the way toward the monthly pivot point at 1.0724. The medium term outlook remains broadly bearish, as the Fed meeting is looming and weekly technical indicators are pointing confidently downwards.
Traders’ Sentiment
The bullish portion of SWFX positions accounts for 43% today, down five percentage points over the weekend. Meanwhile, pending orders to acquire the Euro in 50 and 100-pip ranges from the spot are now accounting for only 32% and 36%, respectively.
GBP/USD anchored around 1.51
“Although we continue to look for trend depreciation in GBPUSD, we think the USD may struggle to appreciate too much against major DM peers into year-end following last week’s ECB.”
- Barclays (based on PoundSterlingLive)
Pair’s Outlook
The GBP/USD currency pair weakened on Friday, with intraday volatility reaching the 1.5080 level, but with trade closing at 1.5117. Today the Sterling is expected to extend its correction and continue edging lower, as technical indicators suggest in all timeframes. Immediate support is represented by the weekly PP, now located at 1.5058. Meanwhile, the ultimate low rests around 1.49, namely the lower border of the falling wedge, which should limit this week’s losses and preserve the pattern. At the same time, the 20-day SMA is providing resistance around 1.5144, in case bulls take over.
Traders’ Sentiment
Bulls now take up 59% of the market (previously 56%). The portion of buy orders, however, dropped 14 percentage points to 58%.
USD/JPY to erase last week’s losses
“Higher Treasury yields and gains by U.S. stocks would be an ideal combination to attract dollar support from intuitional investors. But if stock markets react negatively to a rate hike, the dollar could end up relying on higher long-term Treasury yields alone.”
- FPG Securities (based on Reuters)
Pair’s Outlook
The Greenback overperformed on Friday, as it breached the immediate resistance in face of the 20-day SMA and returned above the major level of 123.00. Today the USD/JPY is supported by the weekly PP and the 20-day SMA, which together should prevent the pair from falling back under 123.00. The nearest resistance is represented by the Bollinger band and the weekly R1 around 123.60, which should later cause the US Dollar to bounce back in order to prolong the consolidation trend between 122.20 and 123.75.
Traders’ Sentiment
Bears keep growing stronger, as nearly three quarters (74%) of all positions are short. The share of buy orders slid from 65 to 62%.
Gold spikes towards mid-November highs at 1,085
“If the dollar is unable to rally we may see further (short) squeezes towards $1,095-$1,100 in the short term leading into next week's FOMC meeting.”
- MKS Group (based on CNBC)
Pair’s Outlook
Disappointment from the ECB was fully priced into gold on Friday. The precious metal surged by around $20 per troy ounce. XAU/USD pierced through the July low to close just below the monthly pivot point at 1,085. We expect some selling pressure to be in place here. Unless the mentioned monthly resistance is crossed to the upside, the short term outlook for the bullion will remain bearish. Otherwise, a rally above 1,086 should allow for the extension of gains in the direction of 100/55-day SMAs at 1,116/18. However, this scenario looks increasingly unlikely by the monthly technicals.
Traders’ Sentiment
The short traders have continued to gain ground throughout the weekend, as the share of bulls slipped further to reach 64% by Monday morning.
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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