Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD opens lower as risk appetite grows
“The median of the dot plot will likely migrate to three rate hikes or maybe even two quarter-point rate hikes for 2016.”
- Bank of the West (based on Reuters)
Pair’s Outlook
Markets foresee a consolidation of the Euro in the nearest future, following sharp upward moves earlier over the two preceding weeks. Monday opened with the spot below 1.1246/38, namely the monthly R3 and weekly pivot point. The first bearish target to meet is Feb 9-10 lows at 1.1162, followed by the monthly R2, weekly S1 and 20-day SMA around 1.11. The bulls should rely on this dense support, given that daily technical indicators are confident the EUR/USD pair will be able to resume advancing.
Traders’ Sentiment
Over the weekend the share of bullish traders has gone up to 46%, compared to 42% on Friday. Alongside, 56% and 53% of all pending orders are set to sell EUR vs USD in 50 and 100-pip ranges from the spot price, respectively.
GBP/USD attempts to remain elevated above 1.45
“I don’t see any significant recovery of the pound at this point because there are so many other risks apart from the fundamental ones, including the upcoming EU summit. We might get clarity on the vote’s timing next week but not on its final outcome.”
- Commerzbank (based on Bloomberg)
Pair’s Outlook
Last Friday, the Sterling was unable to significantly outperform the US Dollar and failed to completely negate the preceding day’s losses. Nonetheless, the GBP/USD currency pair is managing to maintain trade above the 1.45 major level, with the weekly PP at 1.4481 providing immediate support. In case the bears take over, a stronger cluster rests around 1.4380, where the up-trend coincides with the monthly PP. However, according to technical indicators, the Cable is likely to edge higher, but with the closest resistance in face of the weekly R1 at 1.4611 being out of reach.
Traders’ Sentiment
Market sentiment inched closer to equilibrium, as 53% of all open positions are now long, compared to 56% on Friday.
USD/JPY enjoys risk appetite
“The dollar may show a technical rebound against the yen from excessive response last week, but selling on recovery will likely predominate.”
- Deutsche Bank (based on Market Watch)
Pair’s Outlook
The US currency succeeded in appreciating against the Yen on Friday, with gains limited by the resistance trend-line at 113.20. Earlier today the Buck strengthened even further, as the risk-on sentiment returned to the markets. The USD/JPY currency pair now faces a rather strong resistance, represented by the monthly S2 and the weekly PP, a breach of which is required for the pair to completely exit the previous two-week down-trend. The bearish trend could still prevail, pushing the Greenback towards the nearest support circa 112.00, as technical studies retain negative signals.
Traders’ Sentiment
Bears are now outnumbering the bulls by 4% points, whereas the share of purchase orders declined from 62 to 59%.
Gold attempts to retake monthly R3 at 1,209
“Gold is lower because of the good bounce in equities and the Chinese selling.”
- a Sydney-based trader (based on CNBC)
Pair’s Outlook
The bullion's bears are trying to demolish the rally of Thursday when the metal had surged from sub-1,200 to above 1,245. Monday morning sees a moderate sell-off, as markets regain risk-taking sentiment. The key support is placed at 1,209 represented by the monthly R3. A drop below here would allow for a loss below the 1,200 psychological mark and in the direction of the October 2015 high at 1,191. Technical indicators still estimate more purchases and the RSI assumes gold is not overbought any more. However, the bullish scenario is quite unlikely to materialise over the next 24 hours.
Traders’ Sentiment
Bullish market participants’ portion is up to only 44% by Monday morning, meaning the majority still prefers downward correction to growth.
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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