Technical Analysis
EUR/USD: Friday’s range bound outlook unchanged
“Fed officials generally looked to share views that they need to maintain a rate hike path given a U.S. recovery.”
- Samsung Futures (based on Reuters)
- Pair’s Outlook
Trading volume on Friday dropped to even lower levels than during the pre-Christmas season, but it failed to raise volatility of the EUR/USD cross. It is broadly flat between 1.1160 and 1.1180, meaning the short-term forecast has not changed very much over the weekend. We see subdued trading activity on Monday as well, due to Bank holidays in many countries. The key primary support is the 38.2% Fibonacci retracement of the earlier March rally at 1.1145 and the 20-day SMA at 1.1141. A fall below here is unlikely, as the weekly S1 is offering another demand above 1.11.
Traders’ Sentiment
Over the weekend we have seen no huge swings from any side to another, as SWFX short traders are holding a 10 pp majority over their long counterparts.
GBP/USD sets eye on 1.42
“We’re now more conscious that there’s strength in the U.S. economy. There were some views that the U.S. won’t be able to raise rates on economic concern, so the weakening dollar should take a break.”
- Okasan Securities Co. (based on Bloomberg)
- Pair’s Outlook
The British Pound remained almost completely unchanged against the US Dollar on Friday, with the monthly PP limiting the losses at 1.4141. However, due to a bearish gap today, trade opened below this mark. Consequently, the monthly PP is now providing immediate resistance, while the second target is located around 1.4250, represented by the weekly PP, the 20 and the 55-day SMAs. Meanwhile, the weekly S1 and the Bollinger band form a support cluster around 1.3977, as a possibility of a bearish development exists, amid technical studies in the medium and longer timeframes remaining bearish.
Traders’ Sentiment
Market sentiment remains bullish at 63%, compared to 62% on Friday. At the same time, the number of orders to acquire the British currency increased from 58 to 59%.
USD/JPY on the verge of breaking the channel
“I find it hard to believe that Japanese players have been actively selling the yen and taking on foreign exchange risk after the (BOJ's) launch of negative interest rates.”
- Shinji Kureda, Sumitomo Mitsui Banking Corporation (based on CNBC)
- Pair’s Outlook
The USD/JPY currency pair took another step closer towards the current bearish channel’s resistance line, but with the bullish momentum limited, amid the 20-day SMA somewhat providing resistance. The pair extends the up-leg after piercing the 20-day SMA, but with supply, represented by the channel’s upper border, stopping the rally. In case the pair manages to break out from the pattern, the next target to limit the gains would then be the weekly R1 at 113.85. Fundamental data, on the other hand, could still cause the pair to drop back under the 113.00, with the immediate support in face of the 20-day SMA failing to hold the losses.
Traders’ Sentiment
Almost three quarters (74%) of all open positions are currently long, whereas the share of purchase orders edged up from 57 to 66%.
Gold in limbo after commodity markets reopen
“While we have stated that Fed tightening may not be as negative for gold as in previous tightening cycles, an April rate rise would likely knock gold lower near term.”
- HSBC (based on CNBC)
- Pair’s Outlook
The bullion is continuously set to hover in limbo after the commodity market returned back to trading on Monday morning, meaning the outlook is largely the same as we had indicated on Friday. This is because the closest resistance lies at 1,227 (23.6% retracement of Dec-Mar uptrend) and the nearest support is the 1,205 mark (monthly PP), while the present spot is placed somewhere in between at 1,215.50. This week’s technical indicators are giving a “strong buy” signal, meaning we can foresee buoyant gold near the aforementioned support and also the weekly S1/lower Bollinger band at 1,199.
Traders’ Sentiment
Even though the commodity market was shut for trading on Friday, this did not prevent the bullish side from gaining market share. It has advanced to 44% by the March 28 morning from 42% three days ago.
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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