GBP/USD inclined to slide lower

Technical Analysis

EUR/USD finds support at 1.38

“Investors are awaiting for further confirmation from the Fed on its rate path, especially if U.S. data in the second quarter starts to look up. For us, the dollar is a buy on dips.”

- UBS (based on Reuters)

• Pair’s Outlook

  EUR/USD, despite its explicitly poor performance during the second part of the last week, seems to have stabilised at 1.38, namely at the major down-trend support line. Accordingly, also considering that weekly and monthly technical indicators are bullish, the Euro is set to resume the advancement. However, the currency pair will have to face tough resistance area around 1.39 to realise its upward potential.

• Traders’ Sentiment

  Compared to the readings in the previous report, the sentiment remains unchanged—35% of positions are long and 65% are short. The distribution between the buy and sell orders is quite unstable. The share of the former 50 pips from the spot price plunged to 41%.

GBP/USD inclined to slide lower

“If sterling is to surge, real news on interest-rate hikes is required. The Bank of England minutes seem to have reinforced the notion that rates will remain at record lows into next year.”

- Nomura (based on Bloomberg

• Pair’s Outlook

  Given that that the Sterling has fallen beneath 1.65, there is a good chance that the bearish momentum has not yet been fully exhausted. In this case GBP/USD should soon leave the 100-day SMA behind and start moving towards the monthly S1. If this support is broken, regardless of the bullish longer-term technical studies, the 2012 highs at 1.63 are to become the next target.

• Traders’ Sentiment

  The gap between the numbers of bullish (48%) and bearish (52%)market participants has narrowed even further since the last update, meaning the sentiment with respect to GBP/USD remains neutral. In the meantime, the percentage of buy orders increased—from 54% up to 61%.

USD/JPY fights 55-day SMA

“We think [Yellen] will back away from that notion [Fed’s hawkishness] and as a result the dollar could give back some gains.”

- Forex.com (based on MarketWatch)

• Pair’s Outlook

  As expected, before re-challenging the 55-day SMA, USD/JPY returned back to the support at 102. Now the currency pair appears to be in a better position to overcome 102.36/26 and thereby get closer to the resistance at 103.03/102.76, which in turn consists of the 100-day SMA and the monthly R1. Still, we should note that the near-term technicals are not in favour of a rally at the moment.

• Traders’ Sentiment

  The share of long positions (71%) in the SWFX marketplace declined three percentage points, but the traders are still heavily biased towards U.S. Dollar’s appreciation. As for the orders placed on USD/JPY, there is not significant difference between the buy (52%) and sell (48%) ones.

USD/CHF looks to extend rally

“A broader-based rally in USD requires validation of the Fed's more aggressive interest rate forecasts from a continued step-up in U.S. data.”

- JPMorgan (based on CNBC)

• Pair’s Outlook

  The exchange rate has successfully breached the down-trend resistance line at 0.88 and is therefore set to continue the rise, even though many of the technical indicators are presently bearish. The closest significant supply zone is at 0.89, where the 2012 lows merge with the monthly PP and 55-day SMA and thus may create notable difficulties for the current recovery.

• Traders’ Sentiment

  A substantial majority of the market participants (72%) are convinced the greenback is going to increase in value relative to the Swiss Franc, even though since last year’s May the market has been generally bearish. At the same time the percentage of orders set to purchase the U.S. Dollar is going down, from 58% to 55%.