Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD set to attack 1.1320 for second time
“Going up is hard to do, but the dollar will go up.”
- Goldman Sachs (based on Bloomberg)
Pair’s Outlook
The bulls failed at the multi-month downtrend line (1.1320) on Friday and were thereby forced to commence a correction to the 1.1260 area. The first major support for this week is placed some 40 pips lower between 1.1223 and 1.1227 where the weekly pivot point coincides with the monthly R1. Given mixed aggregate daily technical indicators and bullish weekly ones, we foresee no immediate violation of this zone. Rather opposite, the market should give a chance to test 1.1320 once again, but another setback will put any potential recovery at risk.
Traders’ Sentiment
Both 50 and 100-pip pending orders are still set to acquire the Euro is exactly 52% of all cases, no shift from Friday. As for the distribution between long and short positions already opened in the SWFX market, here the latter (59%) substantially outpace the former (41%).
GBP/USD on the edge returning under 1.44
“The Fed’s dovish shift in forward expectations—and consensus is starting to capitulate on the strong dollar due to policy divergence’ thesis.”
- Fundstrat Global Advisors (based on Market Watch)
Pair’s Outlook
The British currency remained relatively unchanged against the US Dollar on Friday, but edged slightly lower over the weekend, unable to maintain trade above the 1.45 mark. The Cable is now under the risk of falling back under the 1.44 major level, with the nearest support located even lower—around 1.4335, represented by the weekly PP and the 20-day SMA. Meanwhile, the monthly R1 is weighing on the GBP/USD pair from above, just above today’s opening price. Furthermore, the pair is also located in a descending channel, and as technical studies in the daily timeframe suggest, there is still room for a rally towards the channel’s upper border near 1.47.
Traders’ Sentiment
Bulls are only outnumbering the bears by two percentage points, whereas the share of sell orders decreased from 59 to 57%.
USD/JPY hovers over 111.00
“With the Fed reaffirming its caution in hiking rates, we expect a more gradual recovery of the USDJPY pair.”
- UBS (based on Reuters)
Pair’s Outlook
As was anticipated, the USD/JPY currency pair recovered from its intraday low on Friday, but was unable to post significant gains, due to the Bollinger band providing sufficient resistance. However, the Bollinger band acts as the immediate support today, providing the Greenback with a chance to begin its recover against the Japanese Yen. The nearest resistance to limit the gains rests at 112.11, namely the weekly PP. According to technical indicators, the US Dollar is to remain relatively flat for another day, thus, neither significant level is likely to be broken today.
Traders’ Sentiment
Market sentiment remains strongly bullish, taking up 70% of the market, compared to 71% on Friday. The number of orders to sell the Buck is completely unchanged at 65%.
Gold erodes weekly gains on buoyant Dollar
“In my mind there's still concerns out there on price.”
- Ayers Alliance (based on CNBC)
Pair’s Outlook
The bullion continues to pare the rally, which took place throughout the previous week amid dovish policy decisions of the Fed. Now the Greenback is back on track, meaning gold is now attracting the bears that are likely to attempt penetrating the long-term uptrend at 1,245. A drop under here would confirm the rising wedge pattern and it will considerably worsen our future outlook for the metal. The following support is the 20-day SMA at 1,240; however, it is not backed by any other demand level for now. Most probably, the target will quickly switch to a dense cluster of supports just above 1,200.
Traders’ Sentiment
During the past 72 hours of the weekend, only one percent of SWFX market participants decided to return to the bullish camp. For now the longs' market share is just 31%.
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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