EUR/USD slips below 1.38

Technical Analysis

EUR/USD slips below 1.38

“Our positioning analysis suggests that markets remain slightly long EUR on the net basis, offering plenty of scope for rebuilding short EUR and long USD positions.”

- BNP Paribas (based on CNBC)

• Pair’s Outlook

  Regardless of the weekly and monthly technical indicators that remain bullish, EUR/USD plunged beneath the support at 1.38. The Euro is currently testing the 55-day SMA at 1.3730, but this level is also reinforced by the 100-day SMA and monthly PP, which significantly increases the probability of a rebound. If, however, the selling persists, the next important demand area is at 1.3584/75, where the monthly S1 merges with the 200-day SMA.

• Traders’ Sentiment

  SWFX market participants, as it seems, did not react to the dip in Euro’s price. Just as 24 hours ago, 65% of them are expecting the common currency to continue losing its value. In the meantime, the share of sell orders decreased, from 64% down to 55%.

GBP/USD stays bullish

“With BNP Paribas positioning analysis indicating a significant scaling back in pound longs, we think there is scope for further pound upside.”

- BNP Paribas (based on Bloomberg)

• Pair’s Outlook
  

  Interestingly enough, EUR/USD and GBP/USD continue moving in the opposite directions, enough though generally we would expect them to exhibit strong direct correlation. Nonetheless, the Sterling, unlike its European counterpart, preserves a bullish momentum, despite the trading taking place just beneath the resistance at 1.6620/00, which consists of the monthly pivot point and the up-trend resistance line and should therefore prove to be tough.

• Traders’ Sentiment

  More and more traders believe the British Pound is unable to carry on appreciating. The percentage of short positions reached 57% and the bearish sentiments are strengthening. As for the orders, the portion of sell ones went up to 58% from 55%.

USD/JPY oscillates beneath 55-day SMA

“Japan could still go a lot further in terms of what they're doing.”

- Chapdelaine Foreign Exchange (based on CNBC)

• Pair’s Outlook

  The story continues, as neither the bulls that see USD/JPY rising from 102 nor the bears that are defending the 55-day SMA seem to be willing to give in. And even though in the short run the downside risks are likely to dominate, as pointed out by the technicals, in the longer-term perspective a dense support area at 101.14/100.67 is expected to act as a line in the sand and trigger buying.

• Traders’ Sentiment
  There was a significant drop in the share of bullish market participants, specifically four percentage points. Still, an overwhelming majority (71%) of the traders reckon that the U.S. Dollar is undervalued. Concerning the orders, 67% are to purchase and 33% are to sell the buck against the Yen.

USD/CHF closes in on 0.89

“The SNB expects the price pressures to be on the downside. We don’t see any big short-term moves in the euro-franc exchange rate.”

- UBS (based on Bloomberg)

• Pair’s Outlook

  As USD/CHF moves closer to 0.89, the technical studies on the weekly and monthly time-frames warn us of a potential sell-off once the key resistance is hit. And while we cannot completely rule out the possibility of a rally through this level, there are few reasons to believe that it is going to be sustainable, considering the presence of the 100-day SMA together with the 11-month down-trend at 0.8928 and the 200-day SMA at 0.9040.

• Traders’ Sentiment

  The distribution between the bullish and bearish market participants remains heavily skewed in favour of the former, being that they take up as much as 74% of the market, which in turn is close to the 10-day average of 73.5%.