USD/JPY breaks major up-trend

Technical Analysis

EUR/USD pushed back to 1.36

“What you’re seeing is a risk aversion sort of trade, the dollar has done well but the euro has lost ground.”

- Deutsche Bank (based on MarketWatch)

• Pair’s Outlook

  EUR/USD failed to sustain a rally through the monthly PP and 55-day SMA yesterday. After topping out at 1.3650 the currency pair retreated, showing a lack of bullish momentum. But there are also serious obstacles in the South, such as a long-term up-trend at 1.3563/47 and support line at 1.35, which are unlikely to let the price fluctuate freely. Both these levels have to be breached for the Euro to confirm its bearish intentions.

• Traders’ Sentiment

  Neither bulls nor bears are able to gain any meaningful advantage over the other party. At the moment the former take up 47% of the market and the latter—53% of it. A similar situation is observed with the orders—46% to buy and 54% to sell the Euro.

GBP/USD stays inactive

“Global and domestic confidence in the U.K. is growing.”

- Mizuho Bank (based on Bloomberg)

• Pair’s Outlook

  GBP/USD remains unable to realise its bullish potential implied by the daily and monthly technical indicators. For now the weekly PP at 1.7113 is enough to support the pair, but there is an increasing risk of a dip down to the 2009 high and weekly S1 at 1.7042. Nevertheless, the baseline scenario is an up-move through the nearest resistances, such as the monthly R1, and to 1.74, where we can expect strong selling pressure.

• Traders’ Sentiment

  While there are still no changes in the sentiment of the market towards the Cable (73% of positions are short), the distribution between the buy (48%) and sell (52%) orders has levelled off since the previous report.

USD/JPY breaks major up-trend

“Treasury yields and U.S. and Japanese monetary policies remain drivers of the yen.”

- Brown Brothers Harriman (based on CNBC)

• Pair’s Outlook

  USD/JPY is getter farther and farther away from recovery, since it has just closed beneath one of the major trend-lines. This support has kept the upward momentum intact since the first months of 2013. Its breach exposed 101, but did not completely invalidate the bullish scenario. The currency pair is still within the boundaries of the descending triangle, meaning there remains a good possibility of the Greenback outperforming the Yen in the end.

• Traders’ Sentiment

  There are 70% of the SWFX market participants believing the Buck is ready to appreciate relative to its Asian counterpart, which is slightly lower than five days ago, when three out of four traders were holding long positions.

USD/CHF oscillates around 200-day SMA

“Unless Treasury yields start moving up, to reflect the better data from the United States, it would be a rather frustrating time for dollar bulls.”

- CIBC World Markets (based on Reuters)

• Pair’s Outlook

  A brief dip below the monthly PP and 200-day SMA did not entail a further sell-off. The U.S. Dollar bounced back above 0.8924/18 and seems to be ready to continue advancing North, where it is going to meet the 55-day SMA, then the monthly R1. However, taking into account the technical studies, the risks appear to be skewed to the downside, meaning there is a fair chance of the rate testing the 100-day SMA at 0.8885.

• Traders’ Sentiment

  The sentiment with respect to USD/CHF is strongly bullish, since 73% of open positions are long and only 27% will profit from a fall in the price. At the same time the buy orders are also in majority, especially 50 pips from the spot—70%.