Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD soars to 1.1176 in volatile ECB session
“Draghi disappointed with his communication and some may need to amend their damaged positions.
- Nomura International (based on Bloomberg)
Pair’s Outlook
Markets finished the trading session yesterday in a slightly disappointing mood, which ultimately sent the EUR/USD cross as high as the second weekly resistance at 1.1176. However, intraday losses were extending to 1.0820, but Mario Draghi’s hawkish comments changed in final state of affairs. As the weekly R2 managed to contain a rally, we can expect a setback from this supply on Friday. In case the pair closes anywhere above 1.1043 (200-day SMA) today, the outlook for the future will become much more bullish than at the moment.
Traders’ Sentiment
A quite surprising Euro’s move to the upside initiated some profit-taking in the SWFX market. Over Thursday the bullish share dropped to 47% from 49% a day earlier. On the back of that, pending orders switched into the green on the basis of 100 pips from the spot price.
GBP/USD in tight range between 1.42 and 1.43
“While we believe the risk of an actual EU exit is not large, we acknowledge that the uncertainty surrounding the vote might negatively affect business confidence, in turn delaying private investments in the country.”
- Pioneer Investments (based on Business Recorder)
Pair’s Outlook
Yesterday’s ECB’s rate decision had an impact on other currency pairs, such as the GBP/USD. The Cable recovered from its intraday low and ended the day with a 66-pip rally, closing near the 1.43 major level. The Sterling appears to be consolidating against the US Dollar this week, with the 1.42 psychological barrier supporting the pair from the downside, also bolstered by the 20-day SMA, the monthly and the weekly PPs, while the upper boundary is represented by the 1.43 mark. Consequently, the bearish momentum should prevail today, although a surge towards the immediate resistance, namely the 55-day SMA and the weekly R1 around 1.4370 is possible.
Traders’ Sentiment
Bulls lost some numbers over the day, as 58% of all open positions are now long. The share of buy orders, however, inched up from 41 to 59%.
USD/JPY takes advantage of risk-on sentiment
“Risk aversion could be next week's theme, potentially pushing dollar/yen back towards 111.00 yen.”
- IG Securities (based on CNBC)
Pair’s Outlook
The American Dollar weakened against the safe haven Yen on Thursday, retreating from its one-week high, amid the sudden return of risk aversion, caused by ECB Draghi’s statement. However, risk sentiment improved today and is likely to push the Buck higher towards 114.00. On the other hand, the USD/JPY struggled to pierce the immediate resistance cluster, represented by the 20-day SMA and the weekly PP, this week, which might contribute to not only limiting the gains at 113.50, but even to an intraday decline. In this case, the weekly S1 at 112.39 is expected to prevent the pair from edging lower, while daily technical studies are unable to confirm either scenario.
Traders’ Sentiment
Today 73% of traders retain a positive outlook towards the US currency, whereas the portion of buy orders surged from 66 to 79%.
Gold reaches new multi-month peaks
“Gold rallied after Draghi’s comment of ‘no need for further interest rate cuts’. The recent change in policy stance will support financial buying in gold.”
- Australia & New Zealand Banking Group (based on Bloomberg)
Pair’s Outlook
A broad buoyant sentiment pushed the precious metal to fresh 13-month highs by Friday morning. Yesterday the bullion’s selloff was successfully limited by the February uptrend below 1,240, and later moderately hawkish remarks by the ECB President Draghi resulted in a surge above 1,270. For now we see the weekly R1 as the first reliable resistance for the remaining 24 hours of this week’s trading, with monthly R1 at 1,295 acting as the second supply level. As daily and weekly technical indicators are mostly bullish, we assume that gradual price increases will stay in place.
Traders’ Sentiment
The total percentage of bearish positions slipped to 58% from 59% about 24 hours ago, meaning our traders continue to prefer a selloff 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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