EUR/USD at two-week low after falling 60 pips

Technical Analysis

EUR/USD at two-week low after falling 60 pips

“The comments from Lockhart have definitely helped bolster the appeal of the U.S. dollar again.”

- Cambridge Global Payments (based on Bloomberg)

• Pair’s Outlook

  EUR/USD was down around 60 pips on Tuesday, thus registering its steepest drop since July 29. As a result, the pair breached the recent low and plunged below 1.09. Currently the Euro is testing the weekly S1 at 1.0864, but bears are mainly concentrating their attention on the last month's low at 1.0808. This support is, however, strengthened by the monthly S1 from below. The medium-term outlook remains firmly bearish, but short-term gains from Jul low are still quite possible.

• Traders’ Sentiment

  The share of bullish open positions in 100-pip range decreased from 55% to 54%. Long pending orders in 100-pip range, however, surged back from 36% to 53% during the past 24 hours.

GBP/USD seeks support at two-week low

“Lockhart was not scheduled to speak until Monday (10 Aug), so the hawkishness of the comments, and the timing of the interview is surprising.”

- Citi (based on CNBC)

• Pair’s Outlook

  The Cable was unable to retake the 1.56 major level on Tuesday, as it slumped under the trend-line, amid US official supporting Sept. rate hike. The bullish trend risks coming to an end if the GBP/USD currency pair fails to appreciate today and settled above the trend-line again. Although the Sterling continued to decline in the early hours today, the tide could still turn, as either the monthly PP or the strong support cluster around 1.5505 might cause a rebound. Nevertheless, gains are still likely to be limited by the weekly PP if they occur, even though technical studies retain their mixed signals.

• Traders’ Sentiment

  Traders lost some confidence in the Pound, as only 54% of positions are long. The portion of buy commands also slid, from 54 to 47%.

USD/JPY to remain stuck around 124.00

“We think it [BoJ] is likely to maintain its current monetary easing framework, in light of three factors: (1) we believe it will maintain its upbeat assessment of the economy; (2) June CPI data indicate inflation continues to improve; and (3) the financial and currency markets remain stable overall.”

- BAML (based on FXStreet)

• Pair’s Outlook

  The US Dollar slightly overperformed, as it appreciated 34 pips against the Japanese Yen, rather than expected 25. The USD/JPY, however, risks falling back down, despite bullish technical indicators. The upper Bollinger band retains its role as the immediate resistance and is likely to prevent the Greenback from edging higher, same as yesterday. As a result, we should see the Buck slide down to the 124.00 support cluster, unless the US fundamentals surprise with better-than-expected figures.

• Traders’ Sentiment

  Both net positions and net orders declined over the day. Only 67% of traders are long the US currency today (previously 75%), whereas 65% of orders are now to acquire the Greenback, down from 70%.

XAU/USD unable to recover

“We suspect that we will see a steady grind lower across most commodity complexes, including gold, largely attributable to the strength of the dollar and poor technicals that will only encourage more funds to further increase their short side exposure.”

- INTL FCStone (based on CNBC)

• Pair’s Outlook

  Gold ended trading flat on Wednesday, despite some attempts to rebound above the weekly pivot point at 1,092. Therefore, the price continues hovering around its lowest level in five years at 1,085. Both short and medium-term outlooks are not about to be changed from negative to neutral or positive. Daily technical indicators suggest the XAU/USD cross will suffer continuous losses, while bears seem to be preparing for this scenario in order to push the bullion down to Jul 20 low at 1,071.

• Traders’ Sentiment

  Sentiment with respect to the precious metal worsened further in the past 24 hours. The portion of long open positions slid from 59% to 56%, and it remains at the lowest level in two months.