USD/JPY re-tested weekly R1

Technical Analysis

EUR/USD plummets 160 pips

“ECB QE is going to cap any euro rebound. But I think the catalyst for next leg lower in the euro will come from the dollar side of the story.”

- Sim Moh Siong, Bank of Singapore (based on Reuters)

• Pair’s Outlook

  The Euro depreciated faster than expected, effortlessly piercing through a supposedly tough support at 1.13. EUR/USD is now trading as low as 1.12, a level that can potentially hold the rate for a while, but is likely to be broken eventually. This will pave the way for a decline to 1.11, namely this year’s minimum, which is also expected to become the victim of the bears in the end, but may well trigger a rally to 1.13/1.14 before giving in.

• Traders’ Sentiment

  A massive sell-off failed to change the sentiment in the SWFX market, which remains largely undecided, with 51% of positions being long and 49% being short. The share of the orders to buy, on the other hand, soared from 48 to 65%.

GBP/USD exits rising wedge

“The pause in the dollar rally will likely extend for another month or two.”

- BMO Capital Markets (based on CNBC)

• Pair’s Outlook

  On Thursday, GBP/USD tested a cluster of resistances around 1.5560 and declined earlier than anticipated. The Sterling breached the lower trend-line of the wedge, which was bolstered by the weekly R1, thus leaving the boundaries of the pattern. The pair even went below the monthly R1, before encountering support around 1.5395. The daily technical indicators are mostly pointing north, meaning the Pound is likely to rebound by the end of the day, but will most likely settle in a tight range between 1.5395 and 1.5447 amid the US data releases later on Friday.

• Traders’ Sentiment

  Market sentiment improved, now it is bullish with 52% of positions being long. The share of buy orders slid down to 33%.

USD/JPY re-tested weekly R1

“The dollar's downside should be limited, as I think many people will use falls as a chance to buy on dips."

- Global-info Co (based on Reuters)

• Pair’s Outlook

  As expected, USD/JPY failed to slump yesterday. Moreover, the pair rallied and met the weekly R1, before settling at a two-week high of 119.41. According to the technical studies, the Greenback is likely to experience losses on the four-hour time frame; however, by the end of today’s trading session an additional surge is expected. The Buck might encounter resistance around 119.50, unless the US data to be released today are better than expected.

• Traders’ Sentiment

  For a third consecutive day the market sentiment among SWFX traders remains positive, with 59% of positions being long. Meanwhile, the number of orders to acquire the Greenback is in a majority as well, taking up 62% of all the commands.

XAU/USD challenges 100-day SMA

“Gold prices have held over $1,200 an ounce despite technical weakness, the near certainty of eventual Fed rate rises, U.S. dollar gains and U.S. yield increases.”

- HSBC (based on Bloomberg)

• Pair’s Outlook

  Despite broad bullishness of the US Dollar on Thursday, the price of gold retained its upward momentum and hit as a result resistance at 1,215.68/1,211.90, created by the 100-day SMA and weekly PP. Although we do not rule out a possibility of XAU/USD closing above the long-term moving average and then targeting supply between 1,226 and 1,227, the correction is expected to end here. The daily and monthly technical indicators are mostly bearish, and a major reversal will probably transpire lower, either at the 2013 low at 1,180.35 or at the 2014 low at 1,131.30.

• Traders’ Sentiment

  The tendency of the bulls to leave the SWFX market did not persist. Apparently, a sharp two-day increase in price of the bullion encouraged more people to go long the metal, as the percentage of bullish positions increased from 65 to 70% during the last 24 hours. The average for 10 days is at 68%.