Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD expects more gains before FOMC
“The euro’s probably going to be stuck in a range. Where it has the potential to break out of that range and start moving lower, really sits on the shoulders of what the BOJ and the Fed do.”
- U.S. Bank Wealth Management (based on Bloomberg)
Pair’s Outlook
As we are entering the vital FOMC-led week today, the outlook for EUR/USD remains cautiously optimistic, particularly because the Fed is not forecasted to raise interest rates. The pair is largely backed by the 1.1050/00 area, where the 200-day SMA coincides with the 20-day SMA and monthly pivot point. Additionally, the 55-day SMA is placed at 1.0986. We see no failure here in the nearest future, as the base scenario implies a growth beyond the monthly R1 at 1.1227. The most important intermediate resistance is Feb high at 1.1377, followed by the four-month uptrend at about 1.1460.
Traders’ Sentiment
Over the weekend the share of long traders has lost four percentage points to 43%. Alongside, pending commands in 100-pip range from the spot price are now fully equally divided between the bulls and bears.
GBP/USD to remain under 1.44
“The FOMC statement and members' fed funds rate forecasts will be closely scrutinized. We see risk of USD weakness if the 2017-18 'dots' were to be moved lower.”
- Barclays (based on Reuters)
Pair’s Outlook
The Sterling refuses to edge lower and appears to be headed towards the resistance line above 1.49. However, the Cable is first required to pierce through the supply area at 1.4446, represented by the monthly R1, which limited the pair’s volatility on Friday. The 1.44 psychological level is also playing a part in the pair’s ability to appreciate, thus, due to no impetus present to push the Pound higher today. As a result, a corrective decline is likely to take place, but the bearish momentum could fail to exceed the 1.4345 mark, as the 55-day SMA and the weekly PP are providing immediate support there.
Traders’ Sentiment
Although not as strong as on Friday, but market sentiment remains bullish at 55% (previously 58%). Meanwhile, the portion of orders to acquire the British currency decreased from 59 to 51%.
USD/JPY in limbo just under 114.00
“We expect the Bank of Japan to expand its asset purchases from ¥80 trillion to ¥90 trillion and lower the interest rate on excess reserves to -0.3%.”
- Capital Economics (based on WBP Online)
Pair’s Outlook
Even though the US Dollar outperformed the Japanese Yen on Friday, the exchange rate remained between the 112.00 and 114.00, namely within its consolidation range. Consequently, the Greenback is now expected to weaken, as trade opened less than ten pips from the upper border of the consolidation trend. However, a possibility of the USD/JPY currency pair edging higher towards 114.50, where the Bollinger band rests, exists, as technical studies are giving bullish signals. The base case scenario, on the other hand, is a decline to 113.28—the 20-day SMA, which is also reinforced by the weekly PP.
Traders’ Sentiment
Nearly three quarters (74%) of all open positions are long today. At the same time, the number of purchase orders dropped significantly, namely from 79 to 63%.
Gold pulls back to reach 1,250
“We have two central bank meetings this week as the BOJ commence a two-day meeting today and the FOMC announce their interest rate decision on Wednesday.”
- MKS Group (based on CNBC)
Pair’s Outlook
On Friday the bullion was out of power to hold to earlier post-ECB gains, as the price eased to the 1,250 mark from intraday peaks above 1,270. Nonetheless, the most important February trend-line remains intact and secured from additional bearish attacks. Future perspectives are moderately bullish and we are looking for the 1,280 mark to be finally confirmed. Looking back, three previous attempts to violate this level had been unsuccessful. Daily technical indicators continue supporting the idea of the advance, while only a slump as low as 1,230 (weekly S1) might destroy the positive forecast.
Traders’ Sentiment
Over the weekend the percentage of long open SWFX positions has been steady at only 42%, meaning the bears are taking up about 58% on Monday morning.
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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