USD/CHF stalls at 0.8928/24

Technical Analysis

EUR/USD breached 100-day SMA

“The bottom line is, as of yesterday, Draghi made very clear that quantitative easing is a policy option for the ECB. That’s effectively breaking a taboo. The euro could fall as low as $1.35 in the coming weeks.”

- Westpac Banking (based on MarketWatch)

• Pair’s Outlook

  As EUR/USD closed beneath the 100-day SMA last week, there is a good chance Euro’s depreciation will persist. But the sell-off will then face a number of formidable obstacles, meaning the decline may be short-lived. The first support is at 1.3663 and is mainly formed by the monthly S1. The next demand area is at 1.3601/1.3584, where the 200-day SMA merges with the weekly S2. The latter level is especially likely to trigger buying.

• Traders’ Sentiment

  The bears in the SWFX market are losing their dominance over the bulls. While five days ago 64% of traders were expecting the Euro to depreciate, today only 57% of them reckon that the single currency is overvalued.

GBP/USD inclined to move south

“The number disappointed NFP bulls, but it was strong enough so that there was no sign of any unexpected weakening of the economy and not so strong as to worry investors that the Fed would accelerate its withdrawal of liquidity.”

- Citigroup (based on Bloomberg)

• Pair’s Outlook

  GBP/USD fell below a series of supports during the last five trading days, including the monthly PP and 55-day SMA. Accordingly, given that there are no dense demand zones nearby, the Sterling is expected to carry ceding ground, even though there are slightly more bullish technical indicators than bearish ones. The closest significant level is 1.6527/22 (100-day SMA), but the key support is at 1.65 and consists of the 2011 highs and monthly S1.

• Traders’ Sentiment

  Since the previous report the gap between the long and short positions has greatly narrowed, being that the percentage of bearish market participants has plunged from 68% down to 59%, meaning the sentiment is becoming much less bearish.

USD/JPY pares recent gains

“The dollar on balance logged a bullish week thanks to steady signs of an improving U.S. economy, which stood in contrasts to growing expectations of potentially easier policy steps in Japan and Europe.”

- Western Union (based on CNBC)

• Pair’s Outlook

  Despite a fairly strong report on Friday the bulls did not manage to push USD/JPY through 104. The pair has already dipped through the support at 103.41/34 and it is currently testing the 100-day SMA. If the moving average gives in, the monthly PP at 102.72 will be exposed. However, this level is reinforced by the weekly S1 and 20-day SMA and most of the daily and monthly indicators are giving ‘buy’ signals, meaning a rebound from there is still a viable scenario.

• Traders’ Sentiment

  For the past three days the sentiment was significantly less bullish than usually (it was fluctuating around 60%), but the share of bullish traders returned to the normal levels and is now 74%. Meanwhile, the portion of buy orders soared from 51% to 63%.

USD/CHF stalls at 0.8928/24

“The numbers [on employment] were sufficiently in line so the bigger picture isn't changed going forward for the Fed.”

- UBS (based on Reuters)

• Pair’s Outlook

  After USD/CHF had broken the resistance near 0.89 (down-trend line and 2012 lows), the pair seems to have lost its bullish momentum. The monthly R1 and 100-day SMA at 0.8928/24 now act as a ceiling and may force the price to return to the levels seen mid-March. On the other hand, should the rate continue advancement regardless of the bearish technical studies, the key resistance area at 0.9032/12 will most likely become the next target.

• Traders’ Sentiment

  Even though the U.S. Dollar is getting more expensive to acquire, the number of traders willing to purchase it is increasing. At the moment the long positions take up as much as 73% of the market (70% last Friday).