EUR/USD probes up-trend

Technical Analysis

EUR/USD probes up-trend

“The Fed is hawkish this time from any aspect. The market has no choice but to buy the dollar.”

- Mizuho Bank (based on Bloomberg)

• Pair’s Outlook

  EUR/USD did not manage to sustain the rally and plunged down to the up-trend support line that has been in force since the beginning of February. According to the technical indicators, the demand at 1.3839/30 is supposed to be enough to keep the currency pair afloat. However, if the selling persists, we will be looking at the down-trend support line at 1.3770 as the next target.

• Traders’ Sentiment

  Apparently, some of the SWFX market participants used the latest decline in the Euro’s price to square off their positions, which led to a drop in the share of shorts from 69% to 67%. Still, the sentiment with respect to EUR/USD remains noticeably bearish. Meanwhile, there has been a large increase in buy orders—from 38% up to 55%.

GBP/USD breaks up-trend at 1.66

“The end result is a market that is left feeling less comfortable about the outlook for policy than before—pricing in more risk of tightening sooner and faster—despite the Fed's best efforts in stressing that their views about policy have not changed.”

- RBS (based on Reuters)

• Pair’s Outlook

  Being that GBP/USD has finally left the boundaries implied by the rising wedge pattern, which was originated in the first half of 2013, there is a strong case for a strong sell-off. The key support, namely the up-trend at 1.66, has been breached, leaving the 2011 highs and the 100-day SMA at 1.65 exposed. If the Sterling does not stop there, which is a likely scenario given the recent events, the price will be expected to test the 2012 highs at 1.63.

• Traders’ Sentiment

  While in EUR/USD traders started closing short positions, here U.S. Dollar’s appreciation encouraged weak but nonetheless selling of the British Pound. The portion of open short positions grew by one percentage point to 56%.

USD/JPY surges above 102

“Investors are avoiding risks amid uncertainties about the Fed. Also, they don't have to take positions before major events in April.”

- Mizuho Securities (based on CNBC)

• Pair’s Outlook

  As the U.S. Dollar strengthened across the board, the resistance near 102 failed to contain the pair and thereby opened a path towards 103.01/102.78—the monthly R1 and the 100-day SMA. Accordingly, USD/JPY retains a bullish outlook in the long-term despite the difficulties faced so far this year, also considering that most of the monthly technical studies are pointing to the upside.

• Traders’ Sentiment

  Traders have not yet reacted to a rally in USD/JPY. Just as yesterday, a substantial majority (71%) of the market participants believe the buck is going to increase in value relative to the Japanese Yen. As for the orders placed 100 pips from the spot price, there is virtually no difference between the numbers of buy (50%) and sell (50%) ones.

USD/CHF jumps to down-trend resistance

“The tone of the [Fed] statement and the updated staff projections sounds more hawkish than expected.”

- Newedge Strategy (based on MarketWatch)

• Pair’s Outlook

  USD/CHF has finally reached the upper edge of the falling wedge, meaning it is now close to exiting the pattern and commencing a robust long-term recovery. However, for now the resistance at 0.8825 proves to be quite tough and is not letting the currency pair to advance further. Consequently, there could be a retracement back to 0.8800/0.8786 before the greenback launches yet another attack.

• Traders’ Sentiment

  Even though a portion of the traders have become somewhat less convinced in the U.S. Dollar’s bullish intentions, a distinct majority of them in the SWFX marketplace, namely 72%, are betting that the greenback is still going to outperform the Swiss Franc.