EUR/USD bumped into 23.6% Fibo

Technical Analysis

EUR/USD bumped into 23.6% Fibo

“The data that sparked the move was weaker than expected but overall data-wise, and as far as the growth outlook is concerned, the U.S. looks more favorable than elsewhere.”

- Morgan Stanley (based on Bloomberg)

• Pair’s Outlook

  As expected, the supply at 1.2850 (23.6% Fibo) was sufficient to prevent further appreciation of the Euro. However, even though afterwards EUR/USD dipped down to 1.27, the subsequent buying pressure did not allow the pair to settle beneath the nearest supports. Accordingly, we are waiting for the price to settle under the 2013 low at 1.2740, which would confirm its intentions to move lower, namely down to this year’s minimum at 1.25.

• Traders’ Sentiment

  The difference between the longs (49%) and shorts (51%) remains negligible, as the market is still undecided with respect to the future of the Euro. As for the pending orders, there is a slight advantage of buy ones (58%) over the sell ones (42%).

GBP/USD reached a ceiling

“The market is unwinding some of the moves that we saw as we come to the conclusion that, even if a Fed liftoff comes a bit later, that still means the U.S. dollar continues to have an advantage relative to most measures.”

- TD Securities (based on Reuters)

• Pair’s Outlook

  Since there were no significant resistances nearby, GBP/USD managed to extend the rally from 1.5850. But now the currency pair is facing a serious obstacle represented by the weekly PP, 20-day SMA and four-month down-trend. Accordingly, the bears are now expected to regain control of the market and force the bulls to retreat some 250 pips before there can be another distinct upward correction.

• Traders’ Sentiment

  Traders’ sentiment currently favours the British Pound—60% of positions are long and 40% are short. As for the orders placed 100 pips from the spot—47% are to buy and 53% are to sell the Sterling against the Dollar.

USD/JPY confirms strong support at 105.50

“The dollar fell so much against the yen that it was bound to bounce some time. However, Treasury yields are still so low that any rise by the dollar is likely to face resistance and peter out.”

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

• Pair’s Outlook

  While the 55-day SMA and 23.6% Fibo were unable to underpin the pair, a joint effort of the monthly S1 and 50% retracement kept the US Dollar from losing even more ground. Now USD/JPY finds itself trapped in a range between 106.50 and 105.50, and a breach of any of there levels should imply continuation of the move in the same direction. However, the upper boundary is considered to be a more likely candidate for a breach—the risks are skewed to the upside.

• Traders’ Sentiment

  The sentiment of the SWFX market towards USD/JPY remains neutral, as the gap between the long and short positions is only eight percentage points. Meanwhile, 46% of pending orders are to buy and 54% are to sell the Buck.

USD/CHF rebounds from 55-day SMA

“The market is catching its breath and waiting to see what will happen in Asia and European trade [Friday] and [awaiting] Yellen’s speech.”

- USForex (based on MarteWatch)

• Pair’s Outlook

  USD/CHF had to travel all the way to 0.9360 to find a significant support, which turned out to be the 55-day SMA and weekly S2. And while it may seem as a bullish sign, the upside potential of the pair in the nearest future may be limited by 0.9450, where the monthly pivot point merges with the weekly S1 and 23.6% Fibo. But even if the sell-off extends, the long-term outlook will be bullish as long as the major up-trend and 100-day SMA at 0.92 are intact.

• Traders’ Sentiment

  The bullish traders continue to take up a larger portion of the market right now—60%, even though the Greenback has been recently performing poorly. At the same time, there was a large drop in the share of sell orders—from 72 to 51%.