USD/JPY's bullish outlook relies on 101

Technical Analysis

EUR/USD faces strong demand at 1.35

“The euro has been in a range with $1.35 as a bottom. The euro will probably trend lower now.”

- TD Securities (based on CNBC)

• Pair’s Outlook

  Last week, despite the pair breaching a long-term down-trend, the bulls successfully defended the key level at 1.35, thus prodding EUR/USD to return to the monthly S1. However, given the number and density of the supply lying overhead, there is little chance the Euro will be able to sustain its current recovery. The price is likely to turn around either at 1.3563/53 or 1.3630/1.3598 and then pierce through 1.35, thereby confirming its bearish intentions.

• Traders’ Sentiment

  There are still no significant changes observed in the sentiment of the market towards EUR/USD—54% of traders are long and 46% are short. On the other hand, there has been a major increase in the sell orders near the spot—from 35% to 65% (50 pips around it).

GBP/USD grinds lower

“Largely the market has been very long sterling and perhaps with some of the events that have happened over the past 24 hours, traders have taken some profits on those positions and have scaled back on some of the risk.”

- JPMorgan (based on Reuters)

• Pair’s Outlook

  There are less and less arguments in favour of a rally. First, the currency pair has been failing to make any meaningful progress for the last three weeks. Second, there is a decreasing number of technical indicators supporting appreciation of the Sterling. Nevertheless, there still are a lot of supports capable of preventing development of the current dip. The closest one is formed by the 2009 high at 1.7042, followed by the monthly PP and 55-day SMA.

• Traders’ Sentiment

  The SWFX traders remain strongly convinced that the Great Britain Pound is overvalued relative to the U.S. Dollar, as evidenced by a large share of short positions opened in the market—72% of the total amount.

USD/JPY’s bullish outlook relies on 101

“A stronger CPI number would boost the U.S. dollar and we’re seeing that data begin to edge up. That’s the biggest risk for the start of the week.”

- ASB Bank (based on Bloomberg)

• Pair’s Outlook

  Abundance of various resistances between 101.50 and 102.50 is not letting USD/JPY to regain its bullish momentum. For now the support at 101 copes with the downward pressure, but a breach of this level could potentially entail a strong sell-off, since there is low concentration of demand beneath. Nonetheless, the monthly technical indicators seem to be mostly optimistic—four out of eight are presently giving ‘buy’ signals.

• Traders’ Sentiment

  In most pairs the Greenback is considered to be undervalued, and USD/JPY is not an exception—74% of traders are currently holding long positions. As for the orders, a majority of them are to purchase the Buck against the Yen.

USD/CHF capped by 0.90

“The dollar is still the safe-haven currency.”

- IronFX (based on MarketWatch)

• Pair’s Outlook

  USD/CHF made a good attempt to break the resistance at 0.90 on Friday, but in the end it was unable to advance further. As a result, the downside risks substantially increased. The rate is now expected to retreat to a cluster at 0.8933/15, where the monthly pivot point merges with the 200-day SMA and a three-month up-trend. Below, there is the 100-day SMA that could help the pair restore the bullish momentum and launch yet another attack on 0.90.

• Traders’ Sentiment

  The sentiment stays distinctly bullish with respect to USD/CHF, being that 74% of positions are presently long (71% last week). Concerning the pending orders placed 100 pips from the spot, there is completely no difference between the buy and sell ones.