Daily Technical Analysis for Majors by Dukascopy

[Anastasia DC]

Gold steps back after Thursday's gains

"Investors are focused on Friday's U.S. non-farm payrolls report, with economists expecting job gains of 178,000 in December."
– Nallur Sethuraman, Reuters

Pair's Outlook
The yellow metal traded below the second weekly resistance, which is located at 1,179.94, on Friday morning. Previously, on Thursday the bullion scored major gains, as it jumped and even reached the 1,184.64 mark during the day's trading session. However, at that point the first monthly resistance level is located at, which stopped the surge and forced the commodity price lower. The bounce off was consistent with the short term ascending channel, in which the metal has been since the start of January.

Traders' Sentiment
SWFX trader remain bullish, as 56% of open positions were long. Meanwhile, 68% of trader set up orders were to buy the bullion.

 

[Anastasia DC]

EUR/USD flat below 1.0550

"Germany is doing well -- the economy is growing fast enough to bolster employment and slow enough to avoid inflationary tensions."
– Andreas Scheuerle, Dekabank (based on Bloomberg)

Pair's Outlook
The common European currency traded almost flat on Monday morning against the US Dollar, as the currency exchange rate fluctuated below the 1.0550 mark. Previously, on Friday the currency pair met with resistance and moves southward to end the session at 1.0529, compared to the opening price of 1.0605. The rate has stopped its lower movements due to a cluster of support made up of the December and April 2015 low levels near 1.0520. It is most likely that the Euro will continue to depreciate against the US Dollar in the near future.

Traders' Sentiment
SWFX trader remain bullish on the pair, as 55% of open positions are long. Meanwhile, trader set up orders have not changed, as 59% of trader set up commands are to sell the Euro.

 

[Anastasia DC]

GBP/USD remains on the back foot

"Independent GBP weakness is the main theme overnight. GBP/USD is just below 1.22 and EUR/GBP above 0.86 after PM May said in a weekend interview that she was not interested in "keeping bits of [EU] membership," a comment widely interpreted as indicating that the UK will leave the single market when it leaves the EU."
– RBC Capital Markets (based on PoundSterlingLive)

Pair's Outlook
Brexit issues continued to weigh on the British currency on Friday, with even weak US fundamental data being insufficient to help the Cable erase its intraday losses. As a result, the GBP/USD pair dropped more than 100 pips on Friday, sliding back under the 1.23 mark. Moreover, the pair opened with a small bearish gap today, with the downside pressure remaining. The closest area to prevent the Sterling from sliding further down is the 1.22 psychological support, which managed to limit downside volatility so far. The weekly S1 is also bolstering this threshold, while technical indicators do bring some additional support, as they are unable to confirm the possibility of the negative outcome.

Traders' Sentiment
More than three quarters (69%) of all open positions are long today, whereas 61% of all pending orders are to sell the Pound (up from 58%).

 

[Anastasia DC]

USD/JPY holds steady above 117.00

"It is interesting to note that while there has been some volatility in the meantime, U.S. equities, the USD, and 10-year yields are all sitting at roughly similar levels to when the Fed hiked nearly four weeks ago."
– ANZ (based on Reuters)

Pair's Outlook
The Greenback almost completely managed to erase its previous losses on Friday, successfully climbing over the 117.00 yen mark. The post-NFP rally is likely to persist today, allowing the pair to return to its previous consolidation range, namely the area between 116.50 and 118.50, despite the initial hard downside movement last week. Technical indicators are also giving bullish signals, suggesting the Buck is to outperform the Japanese currency this week. The 20-day SMA at 117.18 is the closest resistance, but the pair is seen edging up as high as 117.70.

Traders' Sentiment
Market sentiment remains close to equilibrium, as 51% of traders are long the Buck today (previously 52%). At the same time, the portion of buy orders inched down from 61 to 54%.

 

[Anastasia DC]

Gold stops gaining ground

"Some kind of rebound in gold prices is still in place."
– Mark To, Wing Fung Financial Group (based on Reuters)

Pair's Outlook
After three consecutive trading sessions of gains the yellow metal stopped the surge and lost value during Friday's trading session. On Monday morning the commodity price fluctuated near the previous closing price near the 1,175 mark. By looking at the technical indicators and various clues, it can be assumed that the bullion is set to depreciate down to the 1,167.75 level, where the weekly PP is located at. Afterwards, the metal is likely to rebound and move back up to the opening price level.

Traders' Sentiment
Traders have not changed their opinion on Monday, as 56% of open positions remain long. Meanwhile, 62% of trader set up orders were to buy the metal, compared to 68% on Friday.

 

[KristinaDC]

EUR/USD hits trend line on Tuesday

"I expect further dollar strengthening and a parity break in euro already in the first quarter, with a 0.99 level expected at the end of March."
- Jaroslaw Kosaty, PKO Bank Polski (based on Bloomberg)

Pair's Outlook
During the early hours on Tuesday the common European currency reached the upper trend line of the medium-scale ascending channel pattern at 1.0627 against the US Dollar and bounced off of it. This fact combined with the daily aggregate technical indicator forecast support the hypothesis that the rate will continue to decline throughout the day. However, the fall might be hindered by the monthly PP at 1.0580, which proved its strength, providing resistance on Monday. In addition, a continuation of the decline is expected in the future, as analysts discuss not if but rather when parity will be achieved.

Traders' Sentiment
SWFX traders have decreased their total amount of long positions from 55% of total number of open positions on Monday to 53% on Tuesday. Meanwhile, 58% of trader set up orders are to sell the Euro.

 

[KristinaDC]

GBP/USD keeps falling deeper into the pit

"The market just takes the most negative view - it assumes that because May is keeping her cards as close as possible to her chest, there is no plan for Brexit and that we're going to 'hard Brexit' out of the EU."
– BMO Capital Markets (based on Business Recorder)

Pair's Outlook
With newly arisen concerns about Brexit, the Pound experienced another leg down and closed trade below the immediate support level. Nevertheless, the second demand area limited the volatility and it could also be sufficient to trigger a recovery in the upcoming days. In the meantime, the Cable has some room for another decline of 50 pips, which is likely to be the case today. Technical studies, however, are unable to confirm this possibility. The immediate demand area, located around 1.21, is the only obstacle on the pair's path, preventing it from reaching the trend-line below 1.20.

Traders' Sentiment
Traders appear to be buying the dips, as 71% of all open positions remain long (previously 69%). At the same time, the portion of sell orders dropped lower, namely from 61 to 57%.

 

[KristinaDC]

USD/JPY risks falling under 116.00

"The strong dollar policy will likely fade as quickly as Obamacare. When it comes to the U.S. dollar, this time around politics will trump interest-rate differentials."
– Doug Borthwick, Chapdelaine FX (based on Market Watch)

Pair's Outlook
A new spark of risk-aversion prevented the USD/JPY pair from posting more gains yesterday, causing the to fall towards 116.00. Despite the decline, the pair remained within its consolidation range, but due to a breach of that range last week, risks are now skewed to the downside. The Buck's inability to recover today could ultimately cause a drop towards the 114.00 mark, close to where the monthly S1 is located. However, first of all the pair is required to pierce the Bollinger band and the weekly S1 support area. This demand cluster still has the ability to trigger some USD-buying, which is to preserve the consolidation trend, as technical indicators suggest.

Traders' Sentiment
Today 52% of traders have a positive outlook towards the Greenback (previously 51%), while the share of buy orders slid from 54 to 53%.

 

[KristinaDC]

Gold reaches above 1,185 mark

"We are not expecting to see any particular upside to the rally we have seen in the past weeks."
– Daniel Hynes, ANZ (based on Reuters)

Pair's Outlook
The yellow metal began a decline after reaching above the first monthly resistance at 1,184.64 and touching the 1,187.82 level, where a medium-term trend line was located at on Tuesday. The bullion is most likely set to decline after reaching these heights, as during the retreat the metal fell below the monthly R1. Further below the monthly R1 the closest support level is the weekly PP 1,167.75. In addition, markets are expecting a stronger US Dollar not only due to technical reasons but also fundamental events about to occur.

Traders' Sentiment
Traders have not changed their opinion regarding the bullion, as both open positions and set up orders remain unchanged on Tuesday, respectively 56% long and 62% to buy the metal.

 

[KristinaDC]

EUR/USD remains near 1.0550

"Our single currency has proven to be stable and resilient against external shocks, but it has fallen short in strengthening our economy and achieving convergence between the national economies."
– Five Star Movement (based on Bloomberg)

Pair's Outlook
On Wednesday morning the common European currency remained almost flat against the US Dollar near the 1.0550 mark. During Tuesday's trading session the rate once more tried to move higher and failed after encountering the resistance line of a medium term ascending channel. Due to that the outlook for the currency exchange pair still remains bearish. The pair is most likely to move lower and once more approach the support cluster near the 1.0520 mark, which is made up of 2015 December and April low levels together with the 20-day SMA.

Traders' Sentiment
SWFX traders have become neutral, regarding the pair. Meanwhile, 59% of trader set up orders were to sell the Euro.

 

[KristinaDC]

GBP/USD remains on the back foot

"Uncertainty surrounding the UK's Brexit negotiations and the potential impact of a Donald Trump presidency on US monetary and fiscal policy have been the key drivers of the recent move. Against this backdrop, domestic data have played second fiddle."
– Lloyds Bank Commercial Banking (based on PoundSterlingLive)

Pair's Outlook
The Sterling surprised with its performance on Tuesday, as it managed to unexpectedly recover from its intraday low yesterday and even ended the day in the green zone. However, the Pound lacked the strength to climb over the weekly S1, which was the immediate resistance at 1.2184. The weekly S1 retains its role of the nearest resistance today, expected to trigger more weakness. Technical indicators are also in favour of the negative outcome, as they are now giving bearish signals. The support cluster around 1.2120, formed by the Bollinger band and the monthly S1, is likely to limit the losses today, as it has with Monday's and Tuesday's volatility.

Traders' Sentiment
Bulls keep getting stronger, with 72% of traders holding long positions (up from 71%). Meanwhile, the share of sell orders slid from 57 to 53%.

 

[KristinaDC]

USD/JPY in limbo ahead of Trump's speech

"The dollar is set to resume the Trump rally if he provides specifics of stimulus measures, notably those related to tax cuts, which appear achievable. On the other hand, the market is also focused on potential risk factors, like Trump taking a tough stance against China. That could prompt the dollar to fall against the yen."
– IG Securities (based on Reuters)

Pair's Outlook
Even though the USD/JPY currency pair edged lower on Tuesday, the losses were not as harsh as was first anticipated. Wednesday, however, brings a lot of uncertainty, as the US President-Elect is scheduled to speak today. His speech could have a significant impact on the US Dollar's performance. We expect the Buck to strengthen and climb over the monthly PP, which rests at 116.20. Technical indicators also suggest the Greenback is to edge higher today. The overall ceiling is expected to be the 117.00 mark, where the 20-day SMA coincides with the weekly PP, making that area a rather strong resistance.

Traders' Sentiment
There are now 53% of traders with a positive outlook towards the US Dollar, compared to 52% on Tuesday. At the same time, the number of orders to acquire the Buck inched up from 53 to 55%.

 

[KristinaDC]

Gold struggles near 1,190 level

"In addition to U.S. dollar weakness, the gold rally has depended on a pullback in U.S. bond yields and some moderation in equity gains."
– James Steel, HSBC Securities (based on Reuters)

Pair's Outlook
The yellow metal continued to surge during Wednesday's trading session, marking the third consecutive session of gains. However, the bullion is facing a strong resistance level, which is keeping it down. The resistance is represented by the weekly R1 at 1,189.45, and the resistance is set to become even stronger, as the 55-day SMA is moving lower and will join the weekly R1 tomorrow. In addition, at 1,195.14 is a trend line intersection of the medium and long term patterns. These factors combined indicate at an end of the bullion's surge. A reversal of the trend is about to occur.

Traders' Sentiment
Traders remain bullish, regarding the yellow metal, as 55% of open positions were long on Wednesday. Meanwhile, 58% of trader set up orders were to buy the metal.

 

[KristinaDC]

EUR/USD remains above 1.06

"Noticeable within the noise of the last few trading sessions has been the resilient tone from traders and analysts reiterating that their core dollar bullish mindset hasn't shifted, or at least not by a lot."
– Dennis Pettit, Bloomberg

Pair's Outlook
After the jump, which the EUR/USD currency exchange rate experienced in the past few trading sessions, the pair reduced volatility above the 1.06 mark on Friday. Although the rate managed to burst above the resistance cluster near 1.0650, which kept it down on, on Thursday, the rate is back below it. That means that the cluster is set to keep the rate down. Due to that it can be assumed that during the session the rate might surge until it reaches the 1.0650 mark, and afterwards it will bounce off of it and move lower to end the session close to the opening price.

Traders' Sentiment
SWFX traders are neutral bullish on today, as 51% of open positions are long. Meanwhile, 61% of trader set up orders are to sell the Euro.

 

[KristinaDC]

GBP/USD takes another shot at 1.22

"We are still left with the impression that the real economy has yet to be hit by Brexit. It is the politics rather than the economics hitting the pound."
– Rabobank (based on Business Recorder)

Pair's Outlook
The British currency managed to climb over the 1.23 mark for only a short period of time yesterday, ultimately sliding back down and closing trade below 1.22, thus, erasing all this week's gains. In spite of this decline, the Cable still refused to drop below the 1.2150 level, while volatility stretched even lower since Monday. Psychological support here remains strong is likely to cause the GBP/USD to rebound. Consequently, the Sterling has the potential to reclaim the 1.22 mark; however, this implies today's US fundamentals are to disappoint, as they are the main Cable drivers.

Traders' Sentiment
Traders' sentiment returned to its Monday's level of 71%, down from 73% on Thursday. At the same time, the share of sell orders inched up again, namely from 49 to 54%.

 

[KristinaDC]

USD/JPY in limbo ahead of US data

"At this stage, we expect this level [114.00] to offer solid support. That said, the downward pressure would continue to increase unless USD can reclaim 116.40 within the next few days."
– UOB Group (based on FXStreet)

Pair's Outlook
The US Dollar weakened against the Japanese Yen for the fourth consecutive day yesterday, as the immediate support lacked the strength to limit the losses. At this point it is quite difficult for the Greenback to outperform the Yen, as trade opened just under the Bollinger band and the weekly S1 resistance area. Moreover, a possible down-trend rests at 115.92, just under the monthly PP, which kept the pair at bay for two weeks now; however, the trend-line requires an additional confirmation to be fully realised, which a 120-pip rally could provide. Nevertheless, risks are still skewed to the downside, with the monthly S1 at 113.74 being the closest support.

Traders' Sentiment
There are now 53% of traders holding short positions (previously 46%). Meanwhile, the number of buy orders edge down from 68 to 65%.

 

[KristinaDC]

Gold retreats back below 1,200 mark

"Currently we see that gold is overbought and needs some technical correction."
– Jiang Shu, Shandong Gold Group (based on Reuters)

Pair's Outlook
After the surge on Thursday morning the yellow metal retreated to trade back below the 1,200 mark on Friday morning. The move lower occurred due to the fact that in the aftermath of Trump's speech market participants overbought the bullion, and after that a correction occurred. During the previous tow day surge, the long term descending channel has been broken. Due to that the ascending medium term pattern is the one to guide the metal, and in accordance with it the bullion will surge. In addition, the yellow metal has a strong support cluster near the 1,190 mark.

Traders' Sentiment
Traders remain bullish, as 53% of open positions are long on Friday. In the meantime, 59% of trader set up orders are to buy the metal.

 

[Anastasia DC]

EUR/USD retreats to 1.06 mark

"ECB President Mario Draghi is likely to balance out his optimism over near-term economic data against longer-term concerns about the political scene in Europe and inflation that remains barely positive."
– Christopher Vecchio, Daily FX

Pair's Outlook
As forecasted before, the common European currency has begun a retreat against the US Dollar, as on Monday morning the currency exchange rate was near the 1.06 level. That is due to the fact that the pair is being forced lower by the 55-day SMA, which is located at 1.0639. The resistance level is set to slowly pressure the rate lower through the support levels, which are keeping it near the 1.06 mark. However, that is unlikely to occur today or during tomorrow's trading sessions, as there is still a 45 pip range for fluctuations between the levels of significance.

Traders' Sentiment
SWFX traders have become neutral regarding the pair. Meanwhile, 58% of trader set up orders were to sell the Euro.

 

[Anastasia DC]

GBP/USD attempts to recover from weekend's drop

"Even if the pound recovers somewhat in London, it seems as though the realities of a hard Brexit are still not fully priced in. It is difficult to make the case for the pound to avoid testing, probably breaking, the ‘flash crash' lows in coming weeks."
– Westpac Banking Corp. (based on Bloomberg)

Pair's Outlook
Although the British currency managed to edge higher against the US Dollar on Friday, it still failed to maintain trade above the 1.22 level. Nevertheless, the 1.2150 threshold was preserved, but the Cable opened with a hard bearish gap today, now barely managing to hold above 1.20. Political factors, namely UK's access to the single market after Brexit is fully implemented, keep weighing on the Pound. Nevertheless, the Sterling is likely to erase some of the losses that occurred during the gap, while the weekly S1 acts as the closest resistance at 1.2045, which could prevent the GBP/USD pair from recovering.

Traders' Sentiment
Exactly three quarters of traders are now long the Pound, whereas 63% of all pending orders are to sell it.

 

[Anastasia DC]

USD/JPY keeps struggling to edge higher

"With sentiment turning to risk-off, investors buy the dollar but they buy the yen more."
– FX Prime (based on Market Watch)

Pair's Outlook
On Friday the US Dollar continued to weaken against the Japanese Yen, following its two-week bearish trend, however, losses were insignificant. The given pair now has sufficient room for a leg up, with the weekly PP and the two-week down-trend forming immediate resistance only around 115.50, meaning the USD/JPY could surge more than 100 pips within the next three days. On the other hand, technical studies cannot fully confirm this outlook, thus, we should not rule out the possibility of the pair continuing to put the monthly S1 at 113.74 to the test.

Traders' Sentiment
Bears grew stronger over the weekend, being that 55% of all open positions are now short (previously 53%). At the same time, the portion of buy orders edged higher, namely from 65 to 73%.