Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD is back into triangle, awaits Fed
“Part of the reason why it’s [Euro] outperforming today just could be the risk-off tone to the market, as the euro zone still has a wide current account surplus and there’s lots of liquidity.”
- CIBC World Markets (based on Bloomberg)
Pair’s Outlook
Monday trading session saw inflow of funds into the Euro, as risk-aversion reversed EUR/USD back to the North. The pair is now facing an immediate resistance at 1.0849/67, namely weekly pivot point and 20-day SMA. Medium-term bulls are hoping for dovish Fed tomorrow and looking at tougher supply near 1.0960/80 that is reinforced by Dec-Jan downtrend and 100-day SMA. On the other hand, bearish target is December low at 1.0521, and while EUR/USD remains under two-month trend-line the outlook will preserve a negative bias.
Traders’ Sentiment
SWFX bears remain in the majority of 55% for open positions. Alongside, 61% of all pending orders in 100-pip range from the spot suggest the EUR/USD pair will decline in the foreseeable future.
GBP/USD gravitates towards 1.42
“I wouldn’t expect a lot of appreciation in the dollar going forward, because markets have already priced in what is going to happen with relative monetary policy.”
- James Bullard, St. Louis Fed President (based on Bloomberg)
Pair’s Outlook
After having retested the down-trend, the GBP/USD currency pair bounced back and closed trade with a 22-pip loss on Monday. The bearish trend is expected to prevail and cause the Cable to fall deeper, despite the weekly PP providing immediate support. The decline could last down to the monthly S3 at 1.4053, while technical studies also support the bearish scenario. Nevertheless, a possibility of the down-trend getting breached persists, with the monthly S2 and the weekly R1 around 1.4390 being the next target.
Traders’ Sentiment
A solid number of traders remain long the Sterling, namely 65%. Meanwhile, there has been a significant spike in the share of purchase orders; they increased from 40 to 66%.
USD/JPY: safe-haven demand rises
“The market was caught long JPY amid the rapid build-up in expectation for easing. There should be further scope for a reversal to weigh on JPY ahead of the event.”
- Citi (based on Reuters)
Pair’s Outlook
The US Dollar declined against the Japanese Yen on Monday, with price moving slightly outside the lower boundary, amid the return of risk aversion. The risk-off sentiment keeps prevailing today as well, pushing the USD/JPY lower, ignoring the immediate support in face of the 20-day SMA. The next level to limit the dips rests around 117.75, represented by the weekly PP and the monthly S2. However, at this rate the Buck might even close trade below the second support cluster, as technical indicators also contribute to the negative outlook, with no clear signs of a possible rebound.
Traders’ Sentiment
For the third consecutive day traders’ sentiment remains bearish at 71%, whereas the share of purchase orders slid from 64 to 61%.
Gold to break out of triangle on risk aversion
“Gold might go for a run. If that [$1,138] is breached, it could go to $1,160.”
- GoldSilver Central (based on CNBC)
Pair’s Outlook
In the Asian session on Thursday the precious metal has booked some noticeable gains, as the price is located above the January downtrend at 1,113. To show strength and ability to grow further, the bulls are required to keep XAU/USD above 1,107 (downtrend) for two consecutive trading sessions. Some support may come from the Fed tomorrow. If successful, the long traders will focus on much heavier resistance at 1,127/31 (monthly R3 and 200-day SMA). However, downside risks are not off the table, as daily and weekly technical indicators remain quite mixed.
Traders’ Sentiment
Advantage of long traders has been unchanged since last Thursday, as they continue holding about 55% of all open transactions in the SWFX market. Therefore, it puts the bearish portion at 45% and the gap is unchanged at ten percentage points.
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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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