Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD is inching higher towards 55-day SMA
“The euro is at a level where it’s cheap enough. There’s no justification to try and manipulate it even lower, but that doesn’t mean Draghi won’t do it.”
- Santander (based on Bloomberg)
Pair’s Outlook
EUR/USD performed in a confident up-trend on Monday, although the day brought very few fundamental drivers. The pair closed above the weekly pivot point and approached the 55-day SMA at 1.0933. However, this level remains untouched for the time being. According to the daily technical indicators, the Euro should continue growing in the next 24 hours. An increase above the 55-day SMA will expose the 1.1041 mark, namely the 200-day SMA. On the other hand, inability to develop strongly beyond 1.09 may result in a correction and a sell-off back in the direction of 1.08.
Traders’ Sentiment
The share of the SWFX bulls was curbed by one percentage point to 45% by Tuesday. On the other hand, pending orders to acquire the Euro vs Greenback have improved to 47-48% since yesterday.
GBP/USD on the edge of breaking wedge’s support
“I find it hard to imagine big moves in the dollar against the euro or yen by the end of the year, but there is certainly some potential for it to gain against sterling or some of the commodity-linked currencies.”
- Bank of New York Mellon (based on Business Recorder)
Pair’s Outlook
The Sterling failed to rebound yesterday, as it dropped below the 1.49 level and reconfirmed the falling wedge pattern’s lower trend-line. Today the GBP/USD currency pair is under increased risk of falling deeper down, as fundamental data suggests. It is uncertain whether the immediate support will be able to hold the losses at 1.4850—where the Bollinger band rests. Technical studies too suggest the pair is to edge lower; however, the possibility of a surge remains if the US GDP data disappoints, with the weekly PP at 1.4998 acting as the nearest resistance.
Traders’ Sentiment
Bulls keep retreating, with 63% of all positions now long (previously 64%). The share of buy orders also dropped today, from 49 to 47%.
USD/JPY subdued ahead of GDP results
“With the Fed's rate hike at the end of 2015, a new phase of divergence is at hand...we expect the Obama dollar rally to continue in 2016.”
- BBH (based on Reuters)
Pair’s Outlook
The US Dollar retreated from intraday gains on Monday, as an unexpected sell-off pushed the currency below the immediate support. Nevertheless, trade closed with the USD/JPY remaining relatively unchanged (losing only seven pips), but with technical indicators pointing to another possible decline today. The Bollinger band shifted significantly lower, suggesting the exchange rate could drop to around 120.50, while the monthly S1 keeps providing immediate support. Meanwhile, the strong cluster around 121.60 is likely to limit gains in case fundamental data boosts the Greenback.
Traders’ Sentiment
Market sentiment remains bearish, but at 72% (previously 74%). There are now 2% points more orders to buy the Buck, namely 60%.
Gold skyrockets past 1,075 to expose 1,086
“A major stumbling block for a further gold rally is oil, and commodity prices in general.”
- HSBC (based on CNBC)
Pair’s Outlook
A rally, which commenced last Friday, has been successfully prolonged during the past 24 hours. Gold advanced above the July low and 20-day SMA to close slightly below the weekly R1 at 1,077. Now the focus is shifting to the monthly pivot point at 1,086, which is strengthened by the upper Bollinger band and the current December high. Moreover, daily technical indicators are now expecting the bullion to climb. However, bearish risks are created by the 55-day SMA (1,105), which has recently managed to cross another moving average on the longer-term 100-day time frame.
Traders’ Sentiment
The SWFX market participants continued to fix profit from the gains gold has showed on Friday and Monday. As a result of that, the percentage of long traders sank from 57% to 56% yesterday, the lowest level in six trading weeks.
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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