USD/JPY challenges monthly PP

Technical Analysis

EUR/USD erases Friday’s gains

“We can see continued euro weakness because of the geopolitical tension on its doorstep.”

- RBC (based on CNBC)

• Pair’s Outlook

  Behaviour of EUR/USD yesterday confirmed that the bias is to the downside, as the rally from 1.3350 failed to remain intact. Moreover, most of the daily and weekly technical studies are giving ‘sell’ signals at the moment, being in favour of Euro’s depreciation. The nearest support is represented by the weekly S1 and Bollinger band at 1.3347/39, but a more serious test of the downward momentum is to take place at 1.33—2013 Q4 low.

• Traders’ Sentiment

  There is still no significant difference between the amounts of bullish (54%) and bearish (46%) market participants, probably because of consolidation taking place the last few weeks. Similarly, the shares of buy (51%) and sell (49%) orders are nearly equal.

GBP/USD trades at major demand area

“If we do continue to get an indication from Carney that rate hikes are on schedule for November, then there’s scope for sterling to rebound this week.”

- BNP Paribas (based on Bloomberg)

• Pair’s Outlook

  For the time being the monthly S1 level seems to be able to hold the bears. However, the near-term indicators are still pointing downwards, meaning the dip may extend lower before the bulls have a chance to act and negate at least some of the recent losses. An upward correction is still a likely event, given that GBP/USD is currently facing the 200-day SMA and May low. Therefore 1.67 is not expected to be broken in the nearest future.

• Traders’ Sentiment

  The SWFX market participants stay largely bullish with respect to GBP/USD, as 60% of open positions are long. At the same time the percentage of buy orders 50 pips from spot has increased dramatically since the previous report—from 56 to 79%.

USD/JPY challenges monthly PP

“We think the dollar will continue to find it difficult to push higher versus the yen.”

- Brown Brothers Harriman (based on Reuters)

• Pair’s Outlook

  USD/JPY started this week on a strong footing, as it rebounded from the key support last week. Now the currency pair has to surpass the monthly PP and 200-day SMA in order to re-visit this quarter’s highs near the level of 103. Considering the technical indicators the U.S. Dollar is likely to be successful, but is has to stay above the major up-trend line at 101.53/46 for the long-term bullish outlook to remain valid.

• Traders’ Sentiment

  Traders continue to hold optimistic views regarding USD/JPY, being that 72% of them are long the Greenback, performance of which is not meeting the expectations for now. Meanwhile, 50 pips from spot the share of buy orders dropped from 55 to 38%.

USD/CHF charges at 0.91

“The geopolitics are really exaggerated.”

- Brown Brothers Harriman (based on Bloomberg)

• Pair’s Outlook

  The currency pair is presently recovering, but it has to gain a foothold above 0.91 to confirm its bullish intentions. However, even if it does, there will still be the 2014 high standing in the way of a rally. But an extension of an up-move beyond 0.9156 will most likely imply a test of 0.9251, a level last seen on Nov 7. For this scenario to be realised, the key supports at 0.90 (up-trend and 55-day SMA) must not be breached.

• Traders’ Sentiment

  An overwhelming majority (72%) of the SWFX traders believe USD/CHF pair is going to preserve the recently acquired upward momentum, although the share of bulls is relatively smaller than yesterday (75%).