Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD sets eye on key resistance at 1.0940
“I don’t think there’s anything the ECB can do to get euro-dollar down to parity.”
- Societe Generale (based on Bloomberg)
Pair’s Outlook
EUR/USD booked some moderate gains throughout the session on Tuesday, but it was repeatedly contained by the two-month downtrend line at 1.0940. This one remains a key supply level for the pair, which also guards 100-day SMA and monthly R1 at 1.0959/72. Unless all of them are breached, the focus will not shift to 200-day SMA at 1.1052. On the other hand, the bears are also required to confirm the support at 1.0862/41 in order to push further expectations downwards. By closing below the monthly pivot point, the next lower target will be the January low at 1.0711.
Traders’ Sentiment
Long SWFX market participants continued to lose ground yesterday, with their share tumbling to 41% from 43%. Meantime, pending orders are 52% short in both 50/100-pip ranges from the spot.
GBP/USD eyes 1.4680/50
“In an otherwise thin and lacklustre day ... that news of real progress [on ‘Brexit’] has given sterling a little fillip.”
- ETX Capital (based on Reuters)
Pair’s Outlook
After piercing though the monthly pivot point the Cable confirmed 1.4389/80 to be the new support. Therefore, the chances are that for now the currency will keep appreciating against the Dollar. The closest significant resistance is at 1.4533 (weekly R1), but in case of a healthy recovery this is unlikely to stop the pair, and a rally up to 1.4681/53 remains the base scenario. Additional resistance is at 1.4763 (55-day SMA), but anything below 1.50 is bearish.
Traders’ Sentiment
The current sentiment in the SWFX market is a little less bearish than yesterday—57% of positions are short instead of 61% recorded yesterday. Something similar happened to the orders—the share of sell ones dropped from 64 to 56%.
USD/JPY chooses bearish path
“Investors have already found it difficult to buy the yen further, given the monetary policy direction, but they tend to ignore this point when there’s talk of risk factors such as oil prices.”
- Mizuho Securities (based on MarketWatch)
Pair’s Outlook
Despite the support from the technical indicators the latest rally from 116.50 yen proved to be unable to extend beyond the 200-day SMA, meaning the outlook remains bearish. Even if USD/JPY breached 121.50, there would still be a major down-trend at 123. Accordingly, while there might be a small recovery from 119.60, the recent gains are likely to be eventually negated. Beneath the weekly pivot point the next target should be the weekly S1 level at 117.50, followed by the 2015 low at 115.85.
Traders’ Sentiment
There are less bears than yesterday—their portion fell from 72 to 68%. On the other hand, the percentage of orders to sell the Greenback soared from 42 to 75%.
Gold awaits bearish momentum from 200-day MA
“There's not a lot of alternatives for China at the moment and funds are now moving to invest in gold.”
- GoldSilver Central (based on CNBC)
Pair’s Outlook
Risks for gold are skewed to the downside, as the XAU/USD cross is hovering just around an extremely important resistance, namely 200-day SMA at 1,129. To consolidate above it, gold will also have to erase both the weekly R1 and Dec-Jan uptrend at 1,131/33. Such a scenario will become a vital positive signal for gold's future trading. However, a possible bearish impetus provided by 200-day SMA is likely to cause a sell-off down to the weekly pivot point (1,114), which is followed by a bunch of supports above 1,100. Meantime, daily indicators assume a mostly sideways trading over Wednesday.
Traders’ Sentiment
The gap between long and short traders dipped back to ten percentage points in the SWFX market, as the latter have regained 3% over Tuesday. At the moment as many as 55% of all open positions is bullish, leaving the bears in a minority of 45%.
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.
Recommended Content
Editors’ Picks
AUD/USD dips below 0.6600 following RBA’s decision
The Australian Dollar registered losses of around 0.42% against the US Dollar on Tuesday, following the RBA's monetary policy decision to keep rates unchanged. However, it was perceived as a dovish decision. As Wednesday's Asian session began, the AUD/USD trades near 0.6591.
EUR/USD edges lower to near 1.0750 after hawkish remarks from a Fed official
EUR/USD extends its losses for the second successive session, trading around 1.0750 during the Asian session on Wednesday. The US Dollar gains ground due to the expectations of the Federal Reserve’s prolonging higher interest rates.
Gold wanes as US Dollar soars, unfazed by lower US yields
Gold price slipped during the North American session, dropping around 0.4% amid a strong US Dollar and falling US Treasury bond yields. A scarce economic docket in the United States would keep investors focused on Federal Reserve officials during the week after last Friday’s US employment report.
FTX files consensus-based plan of reorganization, awaits bankruptcy court approval
FTX has filed a consensus-based plan for its reorganization, coming almost two years after the now defunct FTX filed for Chapter 11 Bankruptcy Protection in the District of Delaware.
Living vicariously through rate cut expectations
U.S. stock indexes made gains on Tuesday as concerns about an overheating U.S. economy ease, particularly with incoming economic reports showing data surprises at their most negative levels since February of last year.