USD/JPY lingers at 200-day SMA

Technical Analysis

EUR/USD remains bearish

“Summer doldrum conditions prevail with markets susceptible to geopolitical risk.”

- BNY Mellon (based on Reuters)

• Pair’s Outlook

  As expected, none of the nearest supports were able to underpin the price, which gave up 50 pips more. Now there is only the weekly S2 and Bollinger band that separates the spot from the 2013 Q4 low. When EUR/USD reaches 1.33, there will be a good opportunity for the bulls to take advantage of the situation and start an upward correction. This rally could potentially extend to 1.35, where the three-month down-trend merges with the monthly pivot point.

• Traders’ Sentiment

  There are once again more bulls (58%) than bears (42%), but as we learned in the past, this advantage is fragile and may easily come to naught. Meanwhile, the share of buy orders increased from 40% to 53%.

GBP/USD hits weekly PP

“Unless central bankers get even more hawkish and U.K. data improves significantly, it is difficult to see sterling’s strong run continuing indefinitely.”

- Nomura International (based on Bloomberg)

• Pair’s Outlook

  GBP/USD continues to recover—it has already reached the weekly PP at 1.6879. If the currency pair preserves the bullish momentum, it may soon test the 100-day SMA at 1.6916, which in turn is capable of stopping the current advancement. But the resistance area at 1.6997/79 (up-trend, 55-day SMA and monthly PP) is considered to be more important at the moment, as it ensures that the overall outlook is bearish towards the Sterling.

• Traders’ Sentiment

  Just like yesterday, there is a nominal difference between the amounts of bullish (57) and bearish (43%) market participants. The gap becomes even smaller when we turn to the distribution between the buy (49%) and sell (51%) orders.

USD/JPY lingers at 200-day SMA

“A strong batch of U.S. data helped the U.S. dollar’s cause. There was also a good dose of risk aversion last night, and that would’ve helped the U.S. dollar as well.”

- Westpac Banking (based on Bloomberg)

• Pair’s Outlook

  USD/JPY remains unable to decouple from the 200-day SMA, which is not caving in to the selling pressure but at the same time is failing to ignite a rally. However, given that a substantial portion of the technical indicators are pointing North, the risks are still skewed to the upside. Accordingly, the 2014 Q2 high at 104.12 is viewed as the medium-term target, especially since there are no significant resistances overhead, except for the monthly R1 at 103.54.

• Traders’ Sentiment

  There are relatively less longs than 24 hours ago, but they are nonetheless in a distinct majority—70% of the whole market, meaning as many as seven traders out of ten believe the Greenback is going to outperform the Yen in the future.

USD/CHF is willing to touch 0.9156

“We're back into the medium-term trend, which is for a higher dollar.”

- Nordea Bank (based on CNBC)

• Pair’s Outlook

  The U.S. Dollar has launched yet another attack on 0.9099, which has been lately keeping USD/CHF from advancing further. If the attempt is successful, the currency pair will be in a good position to test formidability of the 2014 high at 0.9156 as well. Should the currency pair move even higher, there will be a good reason to consider the 2013 Nov 7 high at 0.9251 the next probable destination, despite the mixed monthly studies.

• Traders’ Sentiment

  While there are no changes in the sentiment towards USD/CHF (73% of positions are long), there was a noticeable increase in the commands to purchase the Buck against the Franc—their share soared from 57% to 77%.