USD/JPY to attempt to retake 124.00

Technical Analysis

EUR/USD attacks 100-day SMA

“If the Fed starts to raise the fed funds rate, that means a higher dollar.”

- SMBC Nikko Securities Inc. (based on Bloomberg)

• Pair’s Outlook

  The bulls are currently eroding the 100-day SMA, and if they succeed, the next target will be a cluster of resistances around 1.1150. There the monthly pivot point joins forces with the weekly R2 level and the 55-day SMA. On the other hand, if the price fails to gain a foothold above 1.10, the focus will return to the May low. In any case, the technical indicators, especially in a monthly chart, do not warrant a prolonger recovery.

• Traders’ Sentiment

  The sentiment among the SWFX market participants continues to deteriorate, as the gap between the bulls and bears has widened from 10 to 16 percentage point. At the same time, the share of buy orders increased from 36 to 41%.

GBP/USD to fall under 1.55; risks dropping to two-week low

“The market is still refusing to price in Fed hikes. 85 percent of economists surveyed see Fed lift off in September, but the market is only pricing in a 10-basis-point move in September at 45 percent.”

- IG (based on CNBC)

• Pair’s Outlook

  Even though the GBP/USD currency pair reached the immediate support on Friday, trade still managed to close above the 1.55 major level. The 20 and 55-day SMAs keep providing substantial resistance around 1.5540 today, which should cause the Cable to edge lower again, despite the attempts to regain the bullish momentum over the weekend. The closest support is still represented by the weekly S1, now at 1.5435; although the Sterling is expected to fall under 1.55, the weekly S1 is unlikely to be reached.

• Traders’ Sentiment

  Bullish traders’ sentiment returned to its Thursday’s level of 51%. The number of orders to acquire the British currency declined nine percentage points. The orders now take up 41% of the market.

USD/JPY to attempt to retake 124.00

“A drop in commodities generates images of a cooling global economy, which in turn leads to 'risk off' that could prompt short-covering of the yen.”

- Monex (based on Reuters)

• Pair’s Outlook

  The Greenback failed to appreciate on Friday, which resulted in reaching the weekly PP at 123.59. The pivot point managed to prevent the USD/JPY from falling deeper, as it kept the pair afloat during all of the week. Furthermore, the US currency is expected to rebound from a strong cluster around 123.45 today and stabilise above the 124.00 psychological level, thus, breaching the immediate resistance in face of the weekly PP. Meanwhile, technical indicators are giving bullish signals, bolstering the possibility of the positive outcome.

• Traders’ Sentiment

  Both net orders and net positions improved today. Now 70% of traders are long the Buck, while buy orders shifted from 63 to 74%.

XAU/USD to bounce off of 1,110

“The most likely outcome is that Fed rhetoric will emphasize that the U.S. economy is on track for a rate hike(s) this year.”

- Mizuho Bank (based on CNBC)

• Pair’s Outlook

  The outlook is strongly bearish towards the bullion, as right now we are consolidating just below the recently broken major trend-line. Moreover, most of the daily and monthly technical indicators are pointing south. The current ceiling is at 1,110, and it is reinforced by the monthly S3. The nearest significant demand area is supposed to be at 1,070, where the weekly S1 merges with the Bollinger band, but this is highly unlikely to stop the oncoming sell-off. Instead, the targets are the 2008 and 2010 lows at 1,032 and at 1,045, respectively.

• Traders’ Sentiment

  Despite poor performance of the commodity most of the traders remain long the gold. At the moment more than 70% of open positions are open to profit from an increase in price.