GBP/USD closes above monthly PP

Technical Analysis

EUR/USD recovers as risk appetite wanes

“If it [QE] is well expected, in a way the impact on the market should already be priced in. There’s diminishing return each time you do QE and more easing -- it’s getting harder and harder.”

- Nomura Holdings (based on Bloomberg)

• Pair’s Outlook

  The single currency is holding to the gains that it has registered over the first trading day of a new working week. EUR/USD failed to consolidate below the Dec-Jan uptrend line, meaning the idea of bearish correction is postponed for some time in the future. Growth above 1.09 exposes the Dec-Jan downtrend near 1.0940, which had earlier refused the bullish scenario for three times. This line is immediately followed by 100-day SMA at 1.0962 and the monthly R1 at 1.0972. Only a spike above here will imply the 200-day SMA (1.1053) is at risk.

• Traders’ Sentiment

  With EUR/USD growing in value, some traders fixed profit and therefore sent the bullish portion down to the four-week low of 43%.

GBP/USD closes above monthly PP

“The market is not pricing in enough of rate hikes in the U.K.”

- GAM (based on Bloomberg)

• Pair’s Outlook

  The Cable keeps balancing between gains and losses, being unable to start a new trend. However, despite the daily and monthly indicators pointing mostly south, the pair was able to rebound from 1.4230 and gain a foothold above the weekly R1 and monthly PP, which creates a good opportunity for another jump higher, though this will still be considered a part of the bullish correction. The next target could be the weekly R2, followed by a solid resistance area between 1.4636 and 1.4681.

• Traders’ Sentiment

  There was a sudden and sharp shift in the sentiment, as the portion of bulls in the market plunged from 63 to 39%. At the same time, the share of orders placed to sell the Sterling rose from 51 to 64%.

USD/JPY enclosed between 121.50 and 120.60

“Overall we're seeing a little bit of risk-off...in the market and I think that's what's driving money into the yen.”

- Stephen Innes, OANDA (based on Reuters)

• Pair’s Outlook

  While a cluster of numerous studies, including the 100-day moving average and a long-term trend-line, proved to be unable to resist the latest rally, the 200-day SMA successfully weathered increased demand for the Dollar. However, this does not imply a sell-off, being that there is now a significant support area at 120.75/54. Accordingly, the pair needs to breach either 121.50 or 120.75/54 to confirm its intentions. In the first case, the target will be the falling trend-line at 123 yen; in the second, the 2015 low at 115.85.

• Traders’ Sentiment

  SWFX traders are not in a hurry to rethink their positions after BoJ’s action—72% of them stay short. Meanwhile, the buy orders hold a small advantage (16 pp) over the sell ones.

Gold takes a shot at 200-day SMA

“Weaker macro numbers out of the U.S. are also increasing the odds that the Fed's December move could have been an outlier, forced onto a central bank that basically had to move after promising to do so for much of the last year.”

- INTL FCStone (based on CNBC)

• Pair’s Outlook

  The most significant moving average line on a 200-day time frame was touched in early November last time. Now gold has an opportunity to overcome this crucial resistance again. However, the presence of two-month uptrend, weekly R1 and upper Bollinger band makes the bullish task tougher. Downside risks are substantial, while the bears are aiming at retaking the support area near 1,100 (100/20-day SMAs; monthly PP; weekly S1; Oct 2015 low). In the meantime, a success at the mentioned closest resistance could lead to more gold purchases with a target at 1,149 (2015 downtrend).

• Traders’ Sentiment

  Slightly less than 58% of all SWFX traders are now betting on price gains for the precious metal. This compares to only a 54% share of the longs yesterday, meaning the gap from the bears has widened to 16 percentage points.

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