EUR/USD bounced off monthly PP

Technical Analysis

EUR/USD bounced off monthly PP

“The failure [of the ECB] to act could trigger another wave of euro buying, similar to last month.”

- Brown Brothers Harriman (based on CNBC)

• Pair’s Outlook

  Despite a good start EUR/USD failed to preserve a bullish tendency and declined after touching the resistance at 1.3820/15, which is created by the monthly PP and 20-day SMA. Still, considering that there is a strong support area beneath the spot and many of the weekly and monthly technical indicators are giving ‘buy’ signals, the bias towards the currency pair remains positive.

• Traders’ Sentiment

  Traders are gradually changing their attitude with respect to EUR/USD. While five days ago as many as 65% of them considered the European currency to be bearish, today this percentage is notably lower, namely at 60%. As for the orders, the sell ones are in a majority with 64% of the total amount.

GBP/USD inclined to move away from 1.6712/09

“We remain of the view that sterling dips should be bought, for instance against the dollar.”

- Credit Agricole (based on Reuters)

• Pair’s Outlook

  GBP/USD does not seem to be in a hurry to descend, but being that it has just recoiled from the rising resistance line, the pair may cede more ground from here. The immediate support is at 1.6591/89, and in case it does not manage to limit potential losses, we will be looking at 1.65 as the next most likely target. There the 2011 highs merge with the 100-day SMA and monthly S1 and thereby imply a formidable support zone.

• Traders’ Sentiment

  The SWFX market participants are notably less bearish towards the Pound than yesterday. The portion of short positions open on GBP/USD went down from 66% to 58%, which is close to the 10-day average of 57.5%.

USD/JPY erodes resistance at 104

“The market is becoming optimistic on the nonfarm payrolls report tomorrow. The dollar’s upward trend versus the yen will continue if the number comes in pretty solid.”

- Gaitame.com Research Institute (based on Bloomberg)

• Pair’s Outlook

  As USD/JPY approached 104, the rate of the U.S. Dollar’s appreciation slowed down. However, the currency pair still retains the potential to surpass the 2013 highs, even though the technical studies in the near term do not support the bullish course of events. If the price breaches the resistance, a recent peak at 105.43 will be deemed the next objective, though the monthly R1 at 104.25 and weekly R3 at 104.60 will oppose the advancement.

• Traders’ Sentiment

  After a significant drop in the number of bullish market participants, the distribution between the long and short positions stabilised. Right now 63% of traders expect the U.S. Dollar to increase in value and 37% believe in an alternative scenario.

USD/CHF found tough support

“For the Fed, [nonfarm payrolls] employment growth in 200K to 225K range will be seen as good enough to justify their current bias for tapering an a pivot towards a 2015 start to policy tightening.”

- TD Securities (based on MarketWatch)

• Pair’s Outlook

  Regardless of seemingly strong bearish momentum, the support at 0.8813/04, mainly created by the monthly PP, managed not only to stop the latest sell-off, but it also initiated a rally that in turn erased the recent losses. The rally is now facing the 55-day SMA, but the real challenge lies at 0.89 and above, and this justifies preponderance of ‘sell’ signals on the longer time-frames.

• Traders’ Sentiment

  The gap between the bulls and bears remains perfectly unchanged, as the former take up 73% of the market and the latter stay in a distinct minority with 27%. Concerning the orders, the buy ones are currently losing their dominance—their share fell from 71% down to 61%.