Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD keeps targeting 1.096 before US GDP
“There was some short covering in the euro after the inflation data. The numbers are mostly better than expected. The euro was also supported as I sense the market has largely pushed out a March rate hike by the Fed.”
- Mizuho Bank (based on Bloomberg)
- Pair’s Outlook
EUR/USD rallied for a fourth consecutive day on Thursday and touched the closest resistance area around 1.0950/70. Friday's Asian session is registering some profit taking, but US GDP later in the day will be a key driver for this currency pair. A negative surprise can result in a climb above 100-day SMA at 1.0972, followed by another formidable supply near 1.1050 (200-day SMA; weekly R2). Positive data, however, should pave the way for EUR/USD's drop toward 55-day SMA at 1.0835, which is preceded by two-month uptrend 15 pips more from the upside.
Traders’ Sentiment
SWFX bears remain in the majority of 55% for open positions. Meanwhile, pending orders deteriorated again to be bearish in 53% and 51% of all cases in 50/100-pip ranges, respectively.
GBP/USD to bounce off of 1.44
“Carney’s conditions for raising interest rates -- which include growth looking strong enough to eliminate the remaining slack in the economy -- are probably still not met. The recovery still looks very unbalanced.”
- Capital Economics (based on Bloomberg)
- Pair’s Outlook
The Cable soared from 1.4230 yesterday and even punched through the resistance line at 1.4360, which was considered to be capable of stopping near-term rallies. Today, however, we are likely to see a downward correction, as the price has just hit not only a trend-line that connects Jan 18 and Jan 28 highs (better observed in the hourly chart), but also monthly S2 and 20-day SMA. GBP/USD might stabilise near 1.4360, but it also would not be surprising for the Sterling to descend down to 1.43 dollars.
Traders’ Sentiment
A small part of traders decided to square off bullish positions—the percentage of longs fell from 65 to 63%. Meanwhile, there is still no real difference between the buy (46%) and sell (54%) orders.
USD/JPY probes 200-day SMA
“Irrespective of this surprise easing from the BOJ, the yen remains rather undervalued, especially after this knee-jerk fall past 120. It remains to be seen if this yen move is sustainable.”
- Credit Suisse (based on Reuters)
- Pair’s Outlook
Because of BoJ’s unexpected announcement USD/JPY covered the distance between the yesterday’s close and 120.50 yen a lot sooner than estimated. However, this does not change the overall picture that the currency pair is still facing a strong supply area, consisting of the 55- and 100-day SMAs. Additional insurance against continuation of Greenback’s further appreciation is provided by the 200-day SMA and monthly PP at 121.45/30, meaning there is a high probability of a sell-off from 120.50.
Traders’ Sentiment
Despite a precipitous decline of the Yen the market sentiment proved to be resilient and stable. The shorts remain in a majority with 74%, while 57% of pending orders are to buy the Dollar.
Gold muted before US growth numbers
“We think China's volatility and its implications for the U.S. are the top risks for gold in 2016.”
- Barclays (based on CNBC)
- Pair’s Outlook
Thursday saw gold prices depreciating on the back of increasing risk appetite across the board. After the bullion met a tough resistance near 1,127 it started to lose value and closed near 1,115 by yesterday evening. On Friday the metal is largely unchanged despite some initial volatility in the Asian session. Markets are waiting for US GDP statistics, where a disappointment could reverse markets back to the North. The bulls continue aiming at monthly R3 and 200-day SMA around 1,127/30 and today their ideas are shared by daily technical indicators.
Traders’ Sentiment
The portion of bullish market participants in the SWFX market bounced off the lowest level in three months. It grew from 53% to 54% by Friday morning, thus expanding the gap from bears up to eight percentage points.
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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