GBP/USD to respect resistance at 1.61

Technical Analysis

EUR/USD to trade beneath 1.29

“The broader portfolio flow taking place over time was one of the driving forces that took the euro higher and dollar lower, and now the trend is starting to shift.”

- Morgan Stanley (based on Bloomberg)

• Pair’s Outlook

  Although there is an immediate resistance level at 1.2786, represented by the monthly pivot point, the supply between 1.29 and 1.2850 is more likely to act as a ceiling this week. If the price approaches this area, we will expect a strong sell-off. Eventually the European currency should erode the support at 1.2750 (weekly PP and 2013 low) in order to open a path towards this year’s lowest value at 1.25 and challenge it.

• Traders’ Sentiment

  Neither the bulls nor the bears are able to gain an advantage over one another—their shares are still nearly equal at 49 and 51% respectively. But there is a little more buy orders (58%) in the market than there are to sell (42%).

GBP/USD to respect resistance at 1.61

“The fact that relative growth is better in the U.S. and the currency is still cheap, means the dollar will rise further.”

- UBS (based on Bloomberg)

• Pair’s Outlook

  The Cable keeps trading right beneath the four-month down-trend, meaning the downside risks are currently elevated. The base case scenario is GBP/USD confirming the resistance at 1.61 and thus terminating the upward correction from the 2013 Q4 low. The support at 1.5850 is therefore considered to be the most likely target. The negative bias is also suggested by the technical indicators, especially on the daily and weekly time-frames.

• Traders’ Sentiment

  Most of the SWFX market participants believe the Sterling is going to outperform the Buck—as many as 61% of open positions are presently long. As for the commands, a majority (59%) is to sell the Pound against the Greenback.

USD/JPY extends recovery from 50% Fibo

“The dollar could extend its gains to the mid-107 yen level if equity market sentiment in Asia and Europe improve.”

- Praevidentia Strategy (byarased on CNBC)

• Pair’s Outlook

  Not only did the demand between 106 and 105.50 refuse to let USD/JPY to retreat more, but it also initiated a rally that resulted in a breach of an important resistance at 106.70. Now, being that there are no significant levels nearby, the currency pair has a good opportunity to reach the supply area around 108. If this obstacle is overcome as well, there will be few doubts regarding the Dollar’s ability to get to the 2014’s high at 110.

• Traders’ Sentiment

  The traders are becoming sceptical regarding the ability of the U.S. Dollar to appreciate relative to the Japanese Yen—the percentage of short positions went up from 54 to 57% over the weekend, leaving the bulls in a more distinct minority with 43%.

USD/CHF closes above 0.9450

“The market sold aggressively throughout the week, and now is thinking maybe they had taken this too far.”

- Barclays (based on Reuters)

• Pair’s Outlook

  The first half of October was marked with poor performance of the US Dollar against the Franc, but now the currency pair managed to settle above 0.9450—a positive sign for the bulls. And even though the technical studies are not in favour of a surge, except for the weekly ones, USD/CHF has the potential to jump up to 0.9550 in the nearest future. In the longer-term perspective the pair should challenge and defeat the resistance at 0.97.

• Traders’ Sentiment

  The gap between the bulls and the bears is in place—while the former take up 61% of the market, the latter—only 39%, meaning the sentiment is bullish at the moment. Concerning the orders, there are more sell ones in a 100-pip range, namely 76%.