USD/JPY faces fierce resistance at 119

Technical Analysis

EUR/USD is little changed at 1.1580

“Expectations are so high that no matter what they do, someone, somewhere, will not be happy.”

- Sarhan Capital (based on MarketWatch)

• Pair’s Outlook

  For a fourth day in a row the EUR/USD pair is swinging between gains and losses, waiting for some impetus to come and push the cross in some direction. It is likely that the Euro is preparing for the ECB's decision-making day tomorrow. Currently the trading range is located between 1.1540 and 1.16, but the overall sentiment still tends to be negative for the euro. However, Wednesday is likely to remain little volatile before possible bearish development overtakes a lead on Thursday.

• Traders’ Sentiment

  Even though the share of bullish positions added one percentage point form yesterday, it is still remaining on the negative side at 49%.

GBP/USD turns around at 1.5050

“The U.S. economy, despite some of the macro headwinds, will likely continue to outpace most of the rest of the industrialized world.”

- Commonwealth Foreign Exchange Inc. (based on Bloomberg)

• Pair’s Outlook

  GBP/USD quickly erased Monday’s losses as soon as it touched upon the weekly S1 at 1.5050. For now the bulls keep pushing the price higher, willing to breach the resistance at 1.5150, represented by the weekly PP and monthly S3. If they succeed, the rally will be in a good position to extend to 1.53, the current location of the 20-day SMA and monthly S2. Conversely, if they fail, the Sterling is likely to continue to move towards the 2013 low at 1.48.

• Traders’ Sentiment

  Apparently, some traders are beginning to take profits on the Pound’s rally, as the share of long positions went down from 58 to 56%. The gap between the buy and sell orders narrowed as well, but from 16 to 6 percentage points in favour of the latter.

USD/JPY faces fierce resistance at 119

“Expectations that the BOJ would actually ease were low, so the yen's appreciation is within the limits of reason.”

- Praevidentia Strategy (based on Reuters)

• Pair’s Outlook

  Though USD/JPY managed to settle above 118 yesterday, at the moment the currency pair is under strong selling pressure after a test of the monthly pivot point at 119. Nevertheless, the support represented by the weekly PP and 23.6% Fibo may well prevent further depreciation of the US Dollar. This would mean the rate is ready to overcome supply at 119 and re-challenge late December highs around 121.

• Traders’ Sentiment

  Despite the increased volatility of USD/JPY, the long-short ratio remains relatively stable. At the moment of writing 63% of open positions are long (62% yesterday). On the other hand, the share of buy orders declined, from 63 to 53%.

XAU/USD climbs above $1,300

“Prices have been boosted by hopes of QE by the European Central Bank, which is expected to have far-ranging effects on the bond market.”

- Phillip Futures (based on CNBC)

• Pair’s Outlook

  As it was expected, XAU/USD's bulls managed to accumulate enough momentum in order to gain significant value during trading on Tuesday. Gold surged above the 61.8% Fibonacci retracement and has also crossed a major resistance line represented by the monthly R2 at $1,283. Moreover, on Wednesday morning an upward trend continued, while gold was pushed above $1,300 per ounce. Nevertheless, the closest supply area around $1,305 (2011 low; weekly R1) is expected to keep bulls under pressure for the next 24 hours.

• Traders’ Sentiment

  Distribution between opened positions for buying and selling the precious metal is still remaining rather positive and in favour of former, while bullish advantage over bears increase three percentage points from Tuesday to reach 61%. However, it still stays below 64% seen in the beginning of the week.