GBP/USD risks falling under 1.53

Technical Analysis

EUR/USD corrects lower to 20-day SMA

“Further measures are unlikely given we are only six months into the current program and have another twelve months to go, and there isn’t much central bank policy can do about falling commodity prices, which suggests that ECB President Mario Draghi will try and talk the euro lower simply because he can’t do much else.”

- CMC Markets (based on WBP Online)

• Pair’s Outlook

  EUR/USD was pushed to the downside during the trading session on Wednesday as the pair erased all gains from the previous day. As expected, the Euro managed to reach Tuesday low at 1.1225 by mid-night, where the 20-day SMA is located as well at the moment. In case bears consolidate the exchange rate below both of these levels, we should see EUR/USD falling down to the next cluster of supports around 1.1120/00. There the pair is going to meet a number of moving averages on different time frames, which may build a reliable support for bulls in the mid-term.

• Traders’ Sentiment

  Bulls and bears reached a perfect equilibrium today, whereas the portion of purchase orders declined from 53 to 35%.

GBP/USD risks falling under 1.53

“Sterling has two issues. We need some clarity on the Fed cycle. The second issue is China and the unfinished business of the yuan devaluation. That’s preventing people from jumping with both feet back into long-sterling positions.”

- ING Groep NV (based on Bloomberg)

• Pair’s Outlook

  The Cable maintained trade in the tight range between the Bollinger band and 200-day SMA, remaining relatively unchanged over the day. However, the Bollinger band shifted more to the downside today, now located at 1.5238, near the weekly S1. As a result, the trading range widened, and the 200-day SMA can push the Sterling lower towards the new support cluster around 1.5230. The possibility of the GBP/USD regaining its bullish momentum persists, as the 1.53 major level might cause a rebound and with the help of the fundamental data force the pair to pierce the 200-day SMA.

• Traders’ Sentiment

  SWFX traders’ sentiment remains unchanged, with bulls taking up 56% of the market. The share of buy orders slid from 52 to 49%.

USD/JPY appears to be glued to 120.00

“Currently, a strong case to go long on the yen and euro against the dollar does not exist, with the possibility of the Federal Reserve hiking rates in September still alive. A clear trend has not formed and that is part of the reason the dollar moves along daily with each turn in equities.”

- BBH (based on CNBC)

• Pair’s Outlook

  The USD/JPY currency pair managed to rebound on Wednesday, as market sentiment slightly improved, although the resistance cluster around 121.00 was not reached. The Greenback keeps gravitating towards the major level of 120.00, unable to fully pierce the weekly PP or the 121.00 resistance cluster. Consequently, the US Dollar is expected to bounce back today, showing modest losses and retreating to the 120.00 psychological level or even to the weekly PP at 119.80. Technical studies remain bearish in the daily timeframe, bolstering the possibility of the negative outcome.

• Traders’ Sentiment

  Bulls lost some numbers, as only 45% of all positions are long today. The number of sell orders added six percentage points, up to 68%.

XAU/USD tumbled for the first time in five days

“Gold is awaiting the payroll data for indications of Fed intentions at the September FOMC meeting. So the market may move sideways until the numbers are released.”

- HSBC (based on Reuters)

• Pair’s Outlook

  The precious metal failed to sustain the rally on Wednesday, as the price declined for the first time in five working days. Despite that, gold is still trading above a strong demand zone at 1,131-26 represented by the monthly pivot point, 2014 low, 20-day SMA and 55-day SMA. While bears are still estimated to take control of the market in the mid-term, they risk losing momentum while remaining above the mentioned cluster of supports. Therefore, gains are still possible in the near term as bulls are aiming at recent high of 1,147.

• Traders’ Sentiment

  SWFX sentiment with respect to gold edged closer to the equilibrium for the first time in almost three months, as bulls and bears are currently holding 51% and 49% of all open positions, respectively.