EUR/USD breaches 55-day SMA

Technical Analysis

EUR/USD stays beneath monthly PP

“We like the dollar on the basis that we’re seeing increased data momentum and positive data surprise.”

- Westpac (based on Bloomberg)

• Pair’s Outlook

  Although the monthly pivot point has been recently breached, the bearish tendency did not gain traction and EUR/USD returned to 1.3815. If this resistance is overcome, we will be looking at the down-trend line at 1.39 as the next most likely target. However, if the supply proves to be sufficient to prevent further gains, it is the 100-day SMA and the rising trend-line near 1.37 that will be expected to be tested in the coming weeks.

• Traders’ Sentiment

  Expectations of the market with respect to the Euro remain unchanged—36% of them are bullish and 64% are bearish. Concerning the orders, the share of the sell ones bounced back and now amounts to 60%.

GBP/USD pushes through Feb high

“The pound is likely to remain range-bound in the current environment but will be sensitive to breaks above 1.6870 and 1.2240 against the dollar and euro respectively, to potentially trigger the next leg of the pound rally.”

- Investec (based on Reuters)

• Pair’s Outlook

  GBP/USD’s foray into the zone above the February high yesterday was not fruitful and the resistance at 1.6822/14 still remains intact. But the sell-off did not ensue and most of the technical indicators are currently bullish, meaning this level could be eroded in the nearest future regardless of its resilience during the last two months. If this is the case, the rally will be set to extend up to the 2009 highs at 1.70.

• Traders’ Sentiment

  Five days ago the advantage of the shorts (58%) over the longs (42%) was minimal, but at the moment they take up a substantial majority, namely 74%. Meanwhile, the distribution between the buy and sell orders is 40% and 60%, respectively.

USD/JPY bounced off 102.82/72

“As Japan's current account condition continues to deteriorate, the yen's function as a safe-haven harbor may come into question.”

- BK Asset Management (based on CNBC)

• Pair’s Outlook

  The currency pair is currently retreating from the resistance zone consisting of the monthly PP and 100-day SMA. The immediate support is represented by the 20 and 55-day SMAs, but USD/JPY is likely to decline deeper, to the weekly PP and 38.2% Fibo at 102.20. Should the bears push the price even lower, the demand at 101.77/69 (monthly S1 and 16-month up-trend) has the potential to negate the downward momentum and trigger a recovery.

• Traders’ Sentiment

  There is still an impressive gap between the amounts of long (71%) and short (29%) positions open on USD/JPY, as the market considers the buck to be greatly undervalued. At the same time the current difference between the buy (55%) and sell (45%) orders is negligible.

USD/CHF confirms resistance at 0.8857

“What is noteworthy is how complacent markets are to geopolitical risk.”

- Scotiabank (based on MarketWatch)

• Pair’s Outlook

  Apparently, the bullish impetus USD/CHF received near the monthly S1 two weeks ago was not enough to throw the pair over the one-year down-trend. This would result in an upside break-out from the falling wedge. However, now the risks are even more heavily skewed to the downside. Accordingly, the U.S. Dollar is likely to breach the support at 0.8834/11 (monthly PP and 55-day SMA) and then set course towards the 2011 lows at 0.86.

• Traders’ Sentiment

  Traders remains convinced that the buck is going to appreciate, as evidenced by a large number of long positions—73%. And the buying pressure may increase, since the portion of commands to purchase the currency suddenly soared from 51% to 65%.