Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD to challenge monthly R3 at 1.1246
“The bigger-picture trend in terms of dollar/yen and euro/dollar is very much complicit with risk appetite turning once again lower after a relatively lackluster session with large parts of Asia out.”
- Canadian Imperial Bank of Commerce (based on Bloomberg)
Pair’s Outlook
EUR/USD turned around yesterday, as rising market instability raised attractiveness of the Euro and sent the pair back to 1.12. The monthly R2 at 1.1115 acted as a reliable support line and managed to avoid a deeper sell-off. The bulls are watching the monthly R3 at 1.1246, which has not been overcome yet. A spike above here will neutralize our outlook on EUR/USD, meaning we continue to see correction as the base case. Intraday losses are possible in the direction of the monthly R2, and a failure here should alleviate any bullish pressure to allow for a drop down to weekly PP at 1.1072.
Traders’ Sentiment
62% of all market participants continue betting on a drop of the Euro against the Dollar, even though 67% of pending orders are set to acquire the European currency in the 100-pip range from the spot.
GBP/USD: bullish trend intact
“After benefiting from dollar weakness across the currency markets last week, it looks like the correction in sterling/dollar might have concluded.”
- FXTM (based on Business Recorder)
Pair’s Outlook
The British currency extended its decline against the US Dollar on Monday, but with trade closing above the expected 1.44 level. The Cable has been trading in a bullish trend for three weeks straight, although the up-trend might be put to the test today. Nonetheless, the monthly PP and the 20-day SMA are bolstering the support line and should limit the losses around 1.4340. Meanwhile, the role of the closest resistance was taken by the weekly PP at 1.4467, but the GBP/USD weakness remains the anticipated outcome.
Traders’ Sentiment
Bulls and bears broke out of the equilibrium, with 54% of all open positions now being long and the remaining 46% - short. At the same time, the number of sell orders increased from 43 to 56%.
USD/JPY slides deeper down on risk aversion
“Risk-sensitive assets are broadly under pressure, despite little in the way of new data releases overnight. In this environment, it is unsurprising to see the ‘safe haven’ JPY.”
- BNZ (based on WBP Online)
Pair’s Outlook
With demand for safe-haven assets higher on Monday, the USD/JPY currency pair fell to a one-year low, while volatility stretched out even further. The risk-off sentiment also dominates today, therefore, the Greenback is likely to end the day in the red zone again versus the Yen, despite daily technical studies suggesting otherwise. The nearest support is represented by the Bollinger band and the weekly S1 at 119.93, but a drop towards the second target, namely the monthly S2 at 113.88, is not out of the question.
Traders’ Sentiment
Bearish sentiment keeps ruling the market, as 73% of traders hold short positions. Meanwhile, 60% of all pending orders are to purchase the Buck, compared to 57% on Monday.
Gold sees upside pressure, set to retest 1,200
“While it's quite clear that one of the drivers here is a weaker U.S. dollar, it does appear that risk appetites are diminishing and that of course means more demand for gold.”
- CMC Markets (based on CNBC)
Pair’s Outlook
Stress across global equity markets is skewing gold's risks to the upside. Yesterday the August 2015 high/monthly R2 at 1,170/68 defended intraday bearish attacks, which resulted in a resumption of the up move. Prices touched the 1,200 mark, but ultimately bounced back to close below the October 2015 high at 1,188. In fact, bullish success above 1,193 (weekly R1) will imply a climb up to the last monthly supply at 1,209 and weekly R2 at 1,213. Given instability of fundamentals, in a nutshell we would not estimate the rally is over.
Traders’ Sentiment
Yesterday the long share retreated to 43% from 50%, falling into minority for the first time in three months and reaching the lowest level in more than a year.
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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