EUR/USD headed towards 2013 low

Technical Analysis

EUR/USD headed towards 2013 low

“The upward revisions to the rate outlook have seen the USD strengthen this morning.”

- National Australia Bank (based on Reuters)

• Pair’s Outlook

  The currency pair lived up to the expectations by breaking out of the recently formed rising wedge to the downside. As the support at 1.29 is now out of the way, EUR/USD is free to descend lower, to the 2013 low at 1.2750, which is likely to be a difficult support to breach. If the bulls fail to stop the five-month sell-off here, the price will most likely fall down to the 2012 low at 1.2050 in the next few months.

• Traders’ Sentiment

  SWFX market participants used the latest dip to acquire the Euro at more attractive prices. As a result, the share of long positions went up from 56 to 61%. Similarly, the percentage of buy orders increased from 42 to 54%.

GBP/USD challenges 23.6% Fibo

“I am now forecasting the [pound] to head toward the $1.67 level, as long as ‘no’ is the outcome.”

- Jameel Ahmad, FXTM (based on MarketWatch)

• Pair’s Outlook

  Despite the U.S. Dollar appreciating across the market, the currency was unable to outperform the British Pound, which in turn is currently attacking the resistance area between 1.63 and 1.635. Considering the density of this supply zone (monthly S2, 23.6% Fibo, etc.), further advancement is highly unlikely. However, a close above this price interval will allow GBP/USD to target the 38.2% retracement of July-August decline at 1.65.

• Traders’ Sentiment

  As yesterday’s open and close prices were almost at the same level, the distribution between the bulls and bears stayed the same—59 and 41% respectively. As for the orders, as many as 68% are to purchase the Pound against the Greenback.

USD/JPY is at 109’s doorstep

“This hawkish twist to the Fed is pushing the greenback higher, and at the same time all its major peers are looking structurally weak at the moment. The U.S. dollar is probably going to continue in very good form.”

- IG (based on Bloomberg)

• Pair’s Outlook

  Following a brief correction USD/JPY jumped 140 pips in one day, effortlessly piercing through the monthly R3 in the process. The pair is now trying to climb over the resistance at 109, represented by the weekly R2 and 2008 Sep high—the last bastion of the bears before the main 2008 high at 110.70. Judging by the technical indicators on the weekly and monthly time-frames, this defence is not going to last long.

• Traders’ Sentiment

  The bearish sentiment with respect to USD/JPY is now as strong as five days ago, when 71% of open positions were short. Concerning the orders set 100 pips from the spot, 70 are to buy and 30% are to sell the Buck.

USD/CHF encounters resistance at 0.9450

“The dollar buying trend against everything has a momentum of its own globally for now.”

- Saxo Capital Markets (based on CNBC)

• Pair’s Outlook

  USD/CHF has finally escaped the boundaries of the flag pattern it has been forming the last two weeks. Now the pair is standing in front of the monthly R3 at 0.94, which is guarding the 2013 Sep high at 0.9450. Accordingly, we may seen some consolidation between these levels while the bulls prepare for a push that is supposed to pave the way for a recovery to the 2013 high that is located 400 pips to the North.

• Traders’ Sentiment

  Apparently, some of the SWFX market traders used USD/CHF’s thrust to take profits yesterday, being that the portion of longs contracted from 56 to 53%. There are also relatively less buy orders—60% (yesterday—62%).