GBP/USD settles above 1.70

Technical Analysis

EUR/USD charges at 200-day SMA

“The trend is going to be toward dollar weakness. The actual Fed outcome nowhere near matched market expectations for hawkishness, which means that we probably aren’t going to see rises in U.S. yields anytime soon.”

- Citigroup (based on Bloomberg)

• Pair’s Outlook

  Broad weakness of the U.S. Dollar allows the single European currency to continue gaining more and more ground. Right now EUR/USD is probing the weekly R1 at 1.3632, but has all the chances to reach out for the resistance at 1.3705/1.3673, created by the 55 and 200-day SMAs. Additional supply is supposed to be at 1.3751/28, and the key level is 1.39, where the long-term down-trend merges with the monthly R1.

• Traders’ Sentiment

  The difference between the amounts remains insignificant, but little by little the bears (54%) are starting to crowd out the bulls (46%). At the same time there was a notable increase in the share of sell orders—from 51% up to 60%.

GBP/USD settles above 1.70

“The dollar continues to move lower as long as we are in an environment where the U.S. central bank is passive in tightening policy.”

- BK Asset Management (based on Reuters)

• Pair’s Outlook

  After several unsuccessful attempts GBP/USD has finally managed to close above 1.70, which was considered to be an unlikely event. However, now the currency pair is in a good position to extend the rally further. The initial resistance is the weekly R1 at 1.7083/66, but the price is deemed to be capable of rising up to 1.7320 in the medium term, as it has recently bounced off the lower boundary of the bullish channel.

• Traders’ Sentiment

  The sentiment towards the British Pound is strongly bearish. Right now 74% of the SWFX traders see the currency as overvalued relative to the U.S. Dollar. As for the orders, the percentage of the sell ones surged from 58% to 66%.

USD/JPY stays flat

“Dollar-yen will probably continue to range trade between the 200-day moving average and its 60-day moving average.”

- Gaitame.com Research Institute (based on Bloomberg)

• Pair’s Outlook

  USD/JPY’s bullish outlook hangs by a thread, considering the pair remains unable to decouple from the major rising support line. In case the rate falls beneath 101.86, the bearish pressure will be expected to intensify, leading to an even deeper decline. Alternatively, if the greenback climbs over 102.32/06 and then overcomes 102.91/77, there will be few doubts regarding further appreciation of the buck.

• Traders’ Sentiment

  There is virtually no change in the distribution between the long and short positions compared to the yesterday’s figures. Consequently, the market participants remain net buyers of the Dollar—73% of them are bulls and 27% are bears.

USD/CHF erodes 200-day SMA

“The rates market appeared to have second thoughts about Wednesday's post-FOMC reaction, with yields reversing some of their decline and helping the USD stabilize as well.”

- BNP Paribas (based on CNBC)

• Pair’s Outlook

  A recent test of 0.90 negatively affected USD/CHF, as the currency couple is now close to breaking one of the most important supports, namely the 200-day SMA at 0.8943/40. If this is the case, it will expose the supports at 0.8900/0.8881 (55-day SMA and monthly PP) and at 0.8863/51 (100-day SMA). However, the monthly technical indicators do not reassure regarding the chances of these levels to stop the sell-off and subsequently revitalise the upward momentum.

• Traders’ Sentiment

  Regardless of USD/CHF leaning south lately, a substantial part of the SWFX traders, namely 65% of them, are holding long positions, believing the U.S. Dollar is going to outperform the Swiss Franc in the end.