EUR/USD meets December downtrend after 150-pip rally

Posted By Posted On 10 January 2016

Technical Analysis

EUR/USD meets December downtrend after 150-pip rally


“I would feel better if we could get a few more rate increases and not have to worry about the balance sheet.”

- Loretta Mester, Cleveland Fed President (based on Reuters)

  • Pair’s Outlook

    Risk-off sentiment, which is currently driving FX and other markets, pushed the Euro considerably to the north against the Greenback on Thursday. Helped by rising trading volume, EUR/USD eroded all nearest resistances and finished the US session just under the monthly downtrend at 1.0930. Following these gains, which were the strongest since early December (post-ECB rally) we expect a bearish correction today. Positive US NFP could provide another momentum to the Dollar, which will move the pair towards a dense technical cluster at 1.08.

  • Traders’ Sentiment

    The bullish portion of SWFX open positions increased from 41% to 44% and bounced off the 12-week low, while 100-pip long pending orders are now enjoying a minimal majority of 51%.

GBP/USD muted ahead of Payrolls data


“Sterling is everyone’s favourite currency to sell at the moment.”

- Bank of New York Mellon (based on Bloomberg)

  • Pair’s Outlook

    The British currency was able to almost completely recover from its daily low yesterday, posting just a 12-pip loss over the day. Even though the 2015 low was only retested, a strong reading of the US Payrolls data today might cause the GBP/USD to drop to a fresh five-year low. Furthermore, a breach of the immediate support cluster is likely to prolong the Cable’s bearish trend until the pair falls to 1.4235—the 2010 low. Contrariwise, a disappointment in the labour market figures could trigger an anticipated rebound, with the nearest resistance in face of the weekly S1 unable to hold the gains.

  • Traders’ Sentiment

    Bullish traders’ sentiment remains unchanged at 64%, while the portion of orders to buy the Sterling edged up from 58 to 69%.

USD/JPY rebounds, as market turmoil fades


“Things are calming down considerably. But the dollar may fall below ¥118, if Shanghai stocks lose momentum again. It seems the dollar may find it top heavy above 118.50.”

- Aozora Bank (based on Market Watch)

  • Pair’s Outlook

    The USD/JPY approached the up-trend on Thursday, but was unable to maintain trade below it, as the monthly S2 was providing additional support. For the first time this week there has been a rebound in Asian stocks, which contributed to the JPY weakness, allowing the US Dollar to take the upper hand and regain the bullish momentum after confirming the support trend-line. Gains could well extend beyond the monthly S1 at 118.93, unless the US fundamentals have a negative impact on the pair and erase intraday gains. The three-year up-trend is expected to remain intact.

  • Traders’ Sentiment

    Only 42% of all open positions are long today (previously 44%). Meanwhile, the share of buy orders lost 10% points, falling to 43%.

Gold encounters 100-day SMA, faces downside risks


“For now, the only way to trade gold is to take a view on the equity markets and on the Chinese market in particular, as it seems to be the driving force that is pushing the rest of the space lower.”

- INTL FCStone (based on CNBC)

  • Pair’s Outlook

    Gold spent another market session in a confident uptrend, as investors attempted to decrease risks in the wake of equity market selloff. A flight to safety pushed XAU/USD as high as 100-day SMA and monthly R2 at 1,107. Positive US fundamentals later on Friday and stock market's stabilization could result in a bearish correction, while short traders are targeting the area below 1,100. A drop below September 2015 low (1,098) is capable of driving prices even deeper down to the next major support cluster at 1,084 (55-day SMA, weekly R2 and monthly R1).

  • Traders’ Sentiment

    On Friday around 55% of all SWFX traders are holding bullish market positions, up two percentage points on a daily basis. Therefore, a recent rebound in prices failed to discourage market participants, as they are not fixing profit and are buying the safe-have asset.

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