GBP/USD stable above 1.56; risks of plunging remain

Technical Analysis

EUR/USD aims for July’s low

“The trend will be for a stronger dollar, but probably not at the pace we’ve seen.”

- Pacific Investment Management Co. (based on Bloomberg)

• Pair’s Outlook

  Since there is no more threat to the resistance trend-line, the focus is now on the July low. The currency pair is expected to pierce through all the nearby supports and make a notable bullish correction only in the region of 1.08. Once this support is out of the way as well, the next target will be this year’s current low at 1.0460, although we may feel the buying pressure a little earlier, near the level of the April’s minimum at 1.0520.

• Traders’ Sentiment

  We did not see a significant change in the distribution between the bulls (44%) and the bears (56%) - the sentiment remains slightly bearish. At the same time, the share of buy orders soared from 48 to 70% during the last 24 hours.

GBP/USD stable above 1.56; risks of plunging remain

“A good number here [UK GDP for Q2] raises expectations about next week’s Bank of England rate meeting and the prospect of the first dissent on the interest rate consensus seen since the beginning of the year.”

- CMC Markets (based on WBP Online)

• Pair’s Outlook

  The Cable declined on Wednesday less than expected, as the pair closed trade in front of the immediate support, namely the monthly PP. The Sterling is expected to rebound today and erase last week’s losses. The weekly R1 is still the nearest resistance; however, we should not rule out the possibility of a slump towards the support cluster around 1.5545 if the US fundamentals show signs of improvement and, thus, boost the US currency. Nonetheless, the GBP/USD pair’s overall bullish trend remains intact and the technical studies support that.

• Traders’ Sentiment

  Market sentiment weakened again, as 48% of all positions are now long. Meanwhile, the share of buy orders slid from 55 to 44%.

USD/JPY keeps trying to stabilise above 124.00

“We're seeing some pretty good follow-through, in terms of U.S. dollar-buying, after the Fed statement (on Wednesday) which suggests that September still appears to be an option.”

- RBC Capital Markets (based on CNBC)

• Pair’s Outlook

  The Greenback’s attempts of edging lower were nullified by a serious obstacle in form of the support cluster around 123.45. Although the USD/JPY erased Monday’s gains yesterday, the pair failed to close above the 124.00 target area, as the weekly PP prevented the rally. The US Dollar is likely to outperform the Yen again today, thus, the 124.00 psychological level should be retaken. However, the Buck might still retreat towards 123.55 if the US fundamental disappoint, despite bullish technical indicators.

• Traders’ Sentiment

  Bullish traders’ sentiment remains unchanged at 74%. At the same time, the portion of commands to acquire the Greenback lost six percentage points. The orders now take up 64% of the market.

XAU/USD bearish until 1,045

“The conclusion the market has taken from the FOMC is that it is one step closer to hiking rates, somewhat increasing the odds of rate hikes in the remaining meetings this year. The U.S. dollar appears set to strengthen until data points, particular for the labor market, stall.”

- Royal Bank of Scotland Group Plc (based on Bloomberg)

• Pair’s Outlook

  Because of the hawkish FOMC statement yesterday, the price for gold is highly likely to stay bearish until we hit 2010 low. Neither the weekly S1 level nor the Bollinger band is considered to be capable of stopping the present sell-off. The negative bias is also confirmed by the technical indicators, especially in the daily and monthly time-frames. In case there is an unexpected rebound, perhaps due to disappointing US fundamentals or due to a sudden risk aversion, supply at 1,104/00 should prove to be strong enough to halt the gains and force the price to make a U-turn.

• Traders’ Sentiment

  Despite the precious metal becoming cheaper, some of the bulls have left the market. Now 70% of open positions are long, while yesterday and the day before yesterday they took 72 and 75% of the market, respectively.