GBP/USD retreats from Feb high

Technical Analysis

EUR/USD closes in on 1.39

“That the euro has risen recently without much resistance shows that dollar weakness is leading current currency trends. Under normal circumstances the market would not be ignoring hints from the ECB that the euro is too high.”

- Brown Brothers Harriman (based on CNBC)

• Pair’s Outlook

  EUR/USD continues to advance. It has just breached the weekly R2 and is about to hit the down-trend resistance line that connects peaks of the past six years. In addition to that there is an up-trend resistance that can be drawn through the highs reached during the last two years. Accordingly, while we cannot completely rule out a possibility of a rally towards the 2011 highs, the probability of such an event is extremely low.

• Traders’ Sentiment

  Traders continue building up shorts, but the Euro carries on grinding higher. The share of bears has already reached 71%, which is an unusually high percentage for EUR/USD. In the meantime, there is no notable difference spotted between the buy and sell commands.

GBP/USD retreats from Feb high

“The reality is that the BOE, just as other leading global central banks will be obliged to do, has to ensure that the recovery is deep rooted and fully established before any reversal of the rate accommodation is instigated.”

- Spotlight Ideas (based on MarketWatch)

• Pair’s Outlook

  As suspected, an initial test of the resistance at 1.6822/1.6786 turned out to be unsuccessful. Considering the strength of the supply area, this may result in a dip back to the up-trend support line at 1.6541/27, where the currency pair is going to meet the 100-day SMA as well. However, we should note there is also a notable cluster of supports around the monthly pivot point and it could prove to be significant in the coming weeks.

• Traders’ Sentiment

  A lack of volatility in the price was reflected in the distribution between the long and short positions, which is exactly the same as yesterday, 38% and 62% respectively. As for the orders, the amounts of buy and sell ones are nearly equal—48% and 52% accordingly.

USD/JPY probes key support

“The dollar is being sold. Lower U.S. rates are leading to the view that the economy is not doing well.”

- Union Bank (based on Bloomberg)

• Pair’s Outlook

  The monthly S1 level, which had the potential to stop the sell-off from 104, was breached. This left the key demand area at 101.36/19 exposed. However, being that this zone is fairly dense (it consists of the long-term rising trend-line, 200-day SMA and 50% Fibo retracement), there is a high chance that the value of the U.S. Dollar will not decline further, but instead we will see emergence of a sustainable recovery.

• Traders’ Sentiment

  The bulls, despite U.S. Dollar’s poor performance, do not back down. They do quite the opposite—they increase the exposure towards the currency. Right now 74% of traders expect the buck to appreciate and only 26% of them have a different opinion.

USD/CHF erodes weekly S2

“The 'risk off' trend is gaining momentum, and we cannot overlook the impact of the Ukrainian situation.”

- Brown Brothers Harriman (based on Reuters)

• Pair’s Outlook

  USD/CHF maintains the course south. If it closes lower today as well, it will be a fifth bearish candle in a row. And while the decline itself should not be a surprise, since the pair is currently moving from one boundary of the pattern to another, absence of a correction was unexpected. But there are still supports that could trigger buying before the rate reaches 0.865, such as the weekly S2 at 0.8755 and the monthly S1 at 0.8728.

• Traders’ Sentiment

  SWFX market participants have become less certain of the bearish tendency not persisting in the future, though we must note that the majority still reckons that the price should eventually go up, specifically 70% of traders.