Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD holds above support at 1.1225
“Going up is hard to do, but the dollar will go up.”
- Goldman Sachs (based on Bloomberg)
Pair’s Outlook
Fluctuations of the most traded FX currency pair were quite limited on Monday, mainly owing to emptiness of the economic calendar. Daily range stood within 20 pips, meaning EUR/USD is maintaining 1.1227/23 as the immediate support. We are thereby not ruling out a spike to 1.1310 where the pair is going to meet the multi-month downtrend. Failure there would be the second one in four days and would diminish our future outlook. Adding to that, the daily RSI indicator supposes the cross is overbought, even though such a view is disagreed by many other daily indicators.
Traders’ Sentiment
Even though the short market participants in the SWFX market are holding the portion of 56%, this is their lowest level in five working days.
GBP/USD retakes 1.44
“Politics is going to be more important than economics for the next three months in the UK and so far, both major political parties seem pretty keen on tearing themselves apart from within. The resignation of Iain Duncan Smith will simply add another layer of political risk to sterling's prospects.”
- Societe Generale (based on Reuters)
Pair’s Outlook
On Monday the Sterling experienced the expected corrective decline against the Buck and returned below the 1.44 major level. However, according to technical indicators, the Pound is likely to appreciate again and extend its recovery towards the current broadening falling wedge’s resistance line. The Cable remains supported by the weekly PP and the 55-day SMA around 1.4335, while the monthly R1 is providing immediate resistance at 1.4446. In case of a breach of the monthly R1, the second target will be the Bollinger band circa 1.4566, but the 1.45 psychological level is to prevent the pair from surging that high.
Traders’ Sentiment
Market sentiment slightly improved, as 58% of all open positions are currently long (previously 51%). The share of purchase orders also increased, namely from 43 to 60%.
USD/JPY struggles to remain above 112.00
“JPY longs finally dropped last week from their highest levels since 2008. This coincided with a better tone in many stock markets and suggests that risk appetite has improved.”
- Rabobank (based on WBP Online)
Pair’s Outlook
The USD/JPY currency pair extended its recovery yesterday, reaching the 112.00 major level. The Greenback now faces an immediate resistance at 112.11 in face of the weekly PP, but this level might give in, as the Buck appears to be heading towards its descending channel’s resistance line around 113.40. However, technical studies are now giving bearish signals in all timeframes, suggesting that supply, represented by the weekly PP, is sufficient to cause a decline towards the nearest support, namely the Bollinger band at 111.38, which in turn is reinforced by the channel’s lower border.
Traders’ Sentiment
Nearly three quarters (73%) of traders are now long the US Dollar, compared to 70% on Monday. Meanwhile, all pending orders are equally divided between the buy and the sell ones.
Gold: key watch on long-term uptrend at 1,247
“In my mind there's still concerns out there on price.”
- Ayers Alliance (based on CNBC)
Pair’s Outlook
Gold has formally broken the long-term uptrend line near 1,245 yesterday, but it has a chance to show the bulls remain active. The drop was caused by stronger Greenback, which recovered after the astonishing slide last week. The key watch is on 1,250 for the next 24 hours. Ability to close above here will revive the possibility of a rally beyond the February high located at 1,263.50. The main support is still offered by the 20-day SMA at 1,241. Reliability of this lonely demand can be questioned, while a failure here will keep traders focused on much lower levels circa 1,205/12.
Traders’ Sentiment
Monday has seen an improvement in terms of the bullish side of SWFX positions. It added three percent to increase up to 34% by the March 22 morning.
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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.