GBP/USD puts pressure on 1.66

Technical Analysis

EUR/USD slowly grinds higher

“Dudley seemed pretty clear it’s time to abandon the 6.5 percent unemployment rate, and it makes sense to do it before their backs are up to the wall.”

- Pierpont Securities (based on Bloomberg)

• Pair’s Outlook

  Even though the monthly R1 level has been already breached, EUR/USD still struggles to gain bullish momentum. If the support at 1.3923/03 fails to keep the pair buoyant, a test of the up-trend line at 1.3839/31 will be expected to trigger buying and thus prevent an extension of the dip down to 1.3770. Accordingly, the monthly R2 at 1.4047 remains a near-term target.

• Traders’ Sentiment

  Absence of activity in the exchange rate translates into static distribution between the long and short positions, which stays as 31% to 69% respectively. In the meantime, SWFX market participants seem to be building up sell orders near the spot, their share went up from 56% to 62%.

GBP/USD puts pressure on 1.66

“The Fed has to acknowledge that the transitory factors are more entrenched since inflation has run below their target for about two years.”

- Bank of America Merrill Lynch (based on Reuters)

• Pair’s Outlook

  Despite the weekly and monthly technical indicators favouring a recovery, the Cable is currently testing a cluster of supports between 1.66 and 1.6550. If this key area gives in to the selling pressure, there will be few reasons for the currency pair to stop at least until it hits 2012 highs at 1.63. The only level capable of halting the decline is considered to be 1.65, which consists of the 2011 highs and 100-day SMA.

• Traders’ Sentiment

  A dip in Sterling’s price resulted in a significant decrease of the share of bearish SWFX market participants—from 59% down to 55%, meaning the sentiment returned to being neutral towards GBP/USD, just as five days ago.

USD/JPY pushed away from 102

“I don’t think there’s even a single person in the world who still thinks the Fed’s jobless-rate guideline is effective. There appear to be more people expecting the Fed to be a little bit more dovish on rates.”

- Masato Yanagiya, Sumitomo Mitsui Banking (based on Bloomberg)

• Pair’s Outlook

  Yesterday USD/JPY erased all of the gains made this Monday, thereby proving that the supply area at 102.17/00 is rather tough. Nevertheless, the path of least resistance is to the upside, being that from below the U.S. Dollar is underpinned by 50% Fibo, monthly S1 and, more importantly, by the 200-day SMA and the 13-month up-trend support line. This should be enough to negate any bearish momentum that may appear in the observable future.

• Traders’ Sentiment

  The difference between the long and short positions moved closer to its 10-day average of 45% and is now 44% in favour of the former. Concerning the orders placed 50 pips from the spot price, the portion of buy ones fell from 57% down to 54%.

USD/CHF fails to overcome weekly PP

“Many investors had probably expected the dollar to strengthen this year because the U.S. economy looked in better shape than others. But their positioning has probably been damaged by the Ukraine crisis and poor economic data due to bad weather.”

- Sumitomo Mitsui Trust Bank (based on CNBC)

• Pair’s Outlook
  

  USD/CHF stays below the weekly pivot point despite several attempts to breach it, whereas initially we were expecting a test of the support at 0.87 to lead to a swift rally towards the down-trend at 0.88 and a subsequent break-out to the upside. Accordingly, there is a good chance the pair will soon once again approach the falling trend-line at 0.87.

• Traders’ Sentiment

  An overwhelming majority of SWFX traders believe the U.S. Dollar is going to appreciate relative to the Swiss Franc, which is evidenced by a considerably larger number of long positions (74%) as compared to the number of short ones (26%). Meanwhile, the percentage of buy orders dropped from 75% to 64%.