Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD depreciates after Fed hiked rates
“The Fed created some balance between expectation for higher rates in 2016 with a dovish overtone regarding the ‘gradual’ pace. That’s why you’re not seeing a stronger rally on the greenback.”
- Silicon Valley Bank (based on Bloomberg)
Pair’s Outlook
EUR/USD registered a mild decline on Wednesday, just after the Fed announced a decision to raise the key interest rate. Thursday trading, however, proves to be much more active from the side of the Dollar's bulls. The pair is expected to test the weekly S1 and 20-day SMA at 1.0845, which is the first major support for today. Another demand is created by 1.0808, namely the July low. Success here should imply an additional sell-off down to the 1.0724 mark (monthly pivot point). Meantime, trading volume stays within historical norms, meaning market volatility is unlikely to be high.
Traders’ Sentiment
The bulls have gained only one percentage point from 45% to 46% since Wednesday. Bullish pending orders dipped considerably in the past 24 hours, down from 40% to 29%.
GBP/USD keeps edging closer to wedge’s support
“The dollar’s strength may persist for a while, as investors feel the mood right after the rate increase, but then may turn top-heavy.”
- Bank of Tokyo-Mitsubishi UFJ (based on Market Watch)
Pair’s Outlook
Due to the Fed delivering no surprises on Wednesday, the markets had a rather mild reaction to the news. Nonetheless, the Cable ended the day with a slump towards the 1.50 major level remains under the risk of falling for the fourth consecutive day today. The Bollinger band around 1.4942 is now the closest support, but a decline towards the down-trend at 1.4895 is also possible if the fundamental data turns in favour of the US Dollar. On the other hand, the GBP/USD could climb over the immediate resistance at 1.5038, but the bearish outcome is more probably.
Traders’ Sentiment
Bulls remain in the majority, as 63% of all positions are long, while the number of orders to sell the Sterling increased from 57 to 68%.
USD/JPY awaits for fundamental data for guidance
“Any dollar/yen appreciation won't come at once, it will rise a step at a time. The next lift will likely come in the next quarter, when the second hike comes up on the agenda.”
- FPG Securities (based on Reuters)
Pair’s Outlook
A group of SMAs helped the US Dollar extend its gains and retake the 122.00 major level, with volatility limited by the monthly PP and 20-day SMA circa 122.40. This group of levels keeps providing immediate resistance today, a breach of which is likely to lead to a surge up to 122.78, namely the weekly R1. Alternatively, the USD/JPY currency pair risks erasing yesterday’s gains if the fundamentals cause the pair the retreat towards the strong cluster of supports around 121.65. Technical studies, however, retain mixed signals, suggesting the immediate resistance might remain intact.
Traders’ Sentiment
Market sentiment remains bearish at 51%, whereas the share of orders to sell the Greenback edged up 4% points up to 60%.
Gold reverses post-Fed rally on Thursday
“Gold has been extraordinarily sensitive to perceived changes in monetary policy for many months. The rate rise may finally clear the deck and remove rate-related uncertainty from the bullion market.”
- HSBC (based on CNBC)
Pair’s Outlook
The Dollar plunged at the expense of gold prices on Wednesday, as the Fed Chair Janet Yellen confirmed the future pace of rate hikes will be gradual. XAU/USD closed above July low around 1,072. On Thursday, however, we are observing a downside correction, which is at risk of being prolonged further. The bears are looking at the lower Bollinger band (1,058) in the short-term, while in the long run depreciation towards the 1,044 mark is possible. On top of that, gold continues to be driven down by two resistances at 1,073/74, namely the 20-day SMA and weekly pivot point.
Traders’ Sentiment
A decision of the world's biggest central bank has been unable to move the SWFX market sentiment so far. At the moment the majority of traders are betting on the metal's rally (59%), while the bearish share is minor of just 41%.
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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