GBP/USD approaches monthly S1 and 200-day SMA

Technical Analysis

EUR/USD to breach 1.3335/28

“There’s a realization that we’re in a period of euro weakness now that fundamentals are coming in play.”

- Royal Bank of Canada (based on Bloomberg)

• Pair’s Outlook

  EUR/USD keeps trying to push through the support at 1.3335/28, a breach of which will pave a way towards the key level at 1.33. A sell-off beyond that point may be postponed, given the significance of the level. As suggested by some of the monthly technical indicators, there is likely to be an upward correction, possibly up to 1.35, before the currency pair posts a new low since the last quarter of the previous year.

• Traders’ Sentiment

  The sentiment of the SWFX market participants towards EUR/USD continues to fluctuate between bullish and neutral, as the difference between the bulls and bears is still minimal, only 14 percentage points in favour of the former.

GBP/USD approaches monthly S1 and 200-day SMA

“Sterling’s direction is “broadly moving sideways but if we get better U.S. numbers out over the next couple of weeks, that’s going to be more of a driver - how much dollar enthusiasm there is out there.”

- HSBC (based on Bloomberg)

• Pair’s Outlook

  As implied by the near-term technical studies, the British Pound continues to cede ground against the Dollar. The closest support that may bring relief is 1.6768/33, which mainly consists of the monthly S1 and 200-day SMA. A little lower, standing next to 1.67, is the May low, which is also likely to interfere and make it difficult for the bears to push the price South. Accordingly, a risk of a pull-back is presently increasing.

• Traders’ Sentiment

  The percentage of long positions went up from 59% to 62%, reflecting a decrease in the vale of the Sterling. At the same time the portion of the buy orders soared from 58% to 71%, meaning the bulls are likely to become even more active in the nearest future.

USD/JPY bears keep selling

“Risk assets and dollar/yen are being sold after news of the airstrike.”

- a trader at a Japanese bank (based on Reuters)

• Pair’s Outlook

  USD/JPY is currently testing a cluster of supports at 101.97/82, which is considered to be able to stop the pull-back and return the pair to a bullish path. However, there are less and less technical indicators that point North, and we may see a deeper correction before the bullish momentum is fully restored. There are still important supports at 101.53 and 101.13/100.95 that have the potential to send the U.S. Dollar higher against the Yen.

• Traders’ Sentiment

  While there is largely no change in the distribution between the long (71%) and short (29%) positions, there are now considerably more buy orders placed 100 pips from the spot—49% yesterday and 67% after 24 hours.

USD/CHF stalls at 0.91

“With the economic impact of the Ukrainian conflict now drawing more attention and Treasury yields declining, downward bias for the dollar is building.”

- Praevidentia Strategy (based on CNBC)

• Pair’s Outlook

  USD/CHF remains unable to cross 0.91, as it keeps getting pushed back after every attempt to get closer to the 2014 high. And while the daily indicators are still optimistic, neither weekly nor monthly studies are currently supporting appreciation of the Buck. It seems the price may undergo a downward correction prior to a successful attack on 0.91. A dense demand area between 0.90 and 0.89 in this case should underpin the rate.

• Traders’ Sentiment

  The gap between the amounts of bullish and bearish market participants stays at elevated levels, constantly being larger than 40 percentage points. A similar situation is observed between the buy (72%) and sell (28%) orders.