GBP/USD climbs back above 1.65

Technical Analysis

EUR/USD fails at 1.3845/31

“The euro moved suddenly and widely after the dovish comments regarding ECB policy, and this likely helped trigger short-covering that prompted the bounce off lows.”

- Barclays (based on CNBC)

• Pair’s Outlook

  Although the support near 1.38 did in fact prevent further depreciation of the Euro last week, for now the currency still remains unable to restore an upward momentum. At the moment it is struggling to breach a weak resistance at 1.3845/31, but is required to firmly close above the tough up-trend line at 1.3923/13 in order to confirm its long-term bullish intentions.

• Traders’ Sentiment

  The share of the bearish market participants did not continue falling but stabilised at 66%, as most of the traders consider the single European currency to be overvalued. In the meantime, there is a growing number of sell orders placed on EUR/USD. Their share went up from 50% to 58%.

GBP/USD climbs back above 1.65

“A further spike up in the pound is not that likely.”

- Pimco (based on Bloomberg)

• Pair’s Outlook

  Despite a recent dip beneath the 2011 highs and 100-day SMA, GBP/USD managed to recover in a short period of time and it is already testing the weekly PP at 1.6538. If the tendency to pare the losses persists, the next significant resistance to try stopping the Sterling from going higher is going to be the rising line at 1.6620/1.6580, which, apart from the 55-day SMA, is also reinforced by the monthly pivot point.

• Traders’ Sentiment

  The gap between the bullish and bearish market participants somewhat widened, but it did not change the fact that the overall sentiment towards the Cable is neutral. At the moment 45% of open positions are long and 55% are short.

USD/JPY stays directionless

“People keep trying to buy dollars, but they get frustrated because it keeps snapping back on them.”

- Faros Trading (based on MarketWatch)

• Pair’s Outlook

  Regardless of constant attempts to break the 20 and 55-day SMAs, the resistance stands its ground and does not let the currency pair to rally. Still, given that the support at 102.07/00 is intact and most of the long-term technical indicators are bullish, there is a chance for USD/JPY to overcome current selling pressure and subsequently challenge the monthly R1 and 100-day SMA at 103.03/102.78.

• Traders’ Sentiment

  Even though just fractionally, but traders’ sentiment with respect to USD/JPY is nevertheless getting less bullish. Compared to the data recorded five days ago, the share of longs fell two percentage points, from 72% to 70%. The portion of buy orders is also contracting, it slid from 63% to 56% during the last 24 hours.

USD/CHF crawls towards 0.89

“Monetary policy is becoming the dominant theme in the dollar market. Unless the indicator has direct bearings on monetary policy, like employment or inflation, the market's sensitivity to such data is becoming lower.”

- Barclays (based on CNBC)

• Pair’s Outlook

  Seemingly with certain difficulties, but USD/CHF nonetheless continues to grind higher in spite of the technicals that mostly give ‘sell’ signals. However, it must be noted that the downside risks are constantly growing, since the pair is approaching a dense supply zone at 0.89. Accordingly, there is a low probability that the U.S. Dollar is going to stay bullish for long.

• Traders’ Sentiment

  The distribution between the bulls and bears stays perfectly unchanged. Just as yesterday and a week ago the long positions take up as much as 74% of the market, leaving the owners of short positions in a distinct minority. At the same time the share of buy orders is decreasing, it dropped from 59% to 42% within a day.