EUR/USD already at 1.32

Technical Analysis

EUR/USD already at 1.32

“There’s a significant divergence in the message coming out of the Fed and the message coming out of the ECB. That is a major supportive factor for the dollar against G-10, particularly against the euro and the yen.”

- Standard Chartered (based on Bloomberg)

• Pair’s Outlook

  The U.S. Dollar strengthened relative to its counterparts over the weekend. Now EUR/USD is only 100 pips away from one of its main targets at 1.31 (2013 Sep low), but the currency pair will have to breach the monthly S1 at 1.3150 first. Even though the weekly technical indicators are largely bearish right now, these supports may trigger an upward correction, which in turn is unlikely to extend beyond 1.33 (monthly S1 and 2013 Q4 low).

• Traders’ Sentiment

  There is still no change in the sentiment of the market. Just as last week, 58% of open positions are long, and the rest are short. On the other hand, the share of buy orders soared, from 31% on Friday to 61% today.

GBP/USD is bearish beneath 1.67

“At the moment the market is very much focused on the bullish trend of the dollar, and as long as we stay below $1.6682 the outlook for the pound is still negative.”

- FOREX.com (based on Reuters)

• Pair’s Outlook

  Given a downside gap there could emerge a small bullish correction before the sell-off (since the beginning of July) resumes. The immediate resistance is at 1.66, represented by the weekly PP. But the outlook will be viewed as bearish as long as the key level at 1.67 (May low) and the 200-day SMA at 1.6750 are intact. In the meantime, a risk of a reversal, suggested by the monthly studies, will be seen as considerable only at this year’s low (1.6250).

• Traders’ Sentiment

  There has been a slight increase in the percentage of bullish traders in the SWFX market—from 63 up to 66%. At the same time there is virtually no difference between the amounts of buy and sell orders placed - 49 and 51% respectively.

USD/JPY attacks 104

“Dr. Yellen’s recognition of the improvement in labor and inflationary conditions, while still more dovish in tone than many other Committee members, suggests a closer alignment to a Committee that is clearly angling toward more near-term policy normalization.”

- BlackRock (based on MarketWatch)

• Pair’s Outlook

  USD/JPY started this week above last quarter’s high, meaning the overall risks are skewed to the upside. However, the pair may need to close the gap (retreat to 103.80) before a scenario, implied by the monthly technical indicators (four out of eight are bullish), is realised. There is a possibility of the dip extending the monthly R1 level, but the 2014 high at 105.44 will still be considered to be the pair’s future destination point.

• Traders’ Sentiment

  The sentiment with respect to USD/JPY is bullish but weak, since only 56% of positions held by traders are long. But there are notably more commands to acquire the Buck—their share went up from 49 to 65%.

USD/CHF posts new 2014 high

“Some people expected more dovish comments from Yellen, but it wasn't a big change.”

- Global-info (based on CNBC)

• Pair’s Outlook

  USD/CHF is forcing its way through the major supply area at 0.9176/56 at the moment. Here the currency pair is battling against the monthly R1 and 2014 high, which may force the Greenback to step back to 0.90 before this resistance is broken. Nevertheless, in the end the bulls are likely to prevail and push the price up to 0.9250, namely the 2013 Nov 7 high, which is also reinforced by the monthly R2.

• Traders’ Sentiment

  Unlike five days ago, when as many as 74% of positions were long, the market is now undecided regarding the future path of USD/CHF—55% expect the Dollar to appreciate and 45% believe the Franc is going to outperform.