Technical Analysis
EUR/USD returns to monthly PP
“If EURUSD continues to hover around 1.40 and the Fed sticks to its current message then the ECB may have to unleash the big guns in the form of negative deposit rates, or QE, to weaken the EUR once and for all.”
- Forex.com (based on MarketWatch)
Pair’s Outlook
Yesterday’s attempt of EUR/USD to decouple from the monthly PP at 1.3815 failed, as the currency pair did not manage to reach the down-trend resistance line at 1.39. Meanwhile, most of the technical indicators on the nearest time-frames are bullish, suggesting it may still try to recover. However, in the long run the Euro is expected to weaken, and the chances of it rising up to the 2011 highs are rather low.
Traders’ Sentiment
SWFX traders are again building up short positions on EUR/USD—their share increased from 65% up to 67.5%. Additionally, the percentage of orders set to sell the common currency also went up, from 60% to 65%.
GBP/USD stopped by Feb high
“The pound's uptrend is intact.”
- Investec (based on Reuters)
Pair’s Outlook
For now the latest up-move did not result in a breach of an important resistance zone at 1.6844/14. And even though majority of the forecasts imply depreciation of the Sterling in the coming months (to 1.64 in Q2 and 1.63 in Q3), we still cannot rule out a rally up to the 2009 highs at 1.70. An advancement far beyond that point, in the meantime, is highly unlikely, in part due to presence of a rising trend-line at 1.71.
Traders’ Sentiment
While yesterday the sentiment towards GBP/USD was moderately negative—60% of open positions were short, today bearish views are even more popular—71% of the SWFX market participants expect the Pound to cede ground.
USD/JPY continues to recover
“The short term upside risks for the broad USD view remain intact.”
- JPMorgan (based on Bloomberg)
Pair’s Outlook
Although initially the bullish momentum of USD/JPY faltered after an encounter with the down-trend resistance line, the upward direction was preserved. Now the currency pair is about to test another significant supply area at 102.91/72, consisting of the monthly PP and 100-day SMA. If this area is overcome, the next objective will be the Apr high and monthly R1 just above the level of 104, as the long-term outlook is positive.
Traders’ Sentiment
There are slight fluctuations, but the bulls carry on dominating the USD/JPY market by taking 70% of it at the moment. As for the orders, 57% of them are to acquire and 43% are to sell the buck against the Yen.
USD/CHF steps over monthly PP
“There are signs of a pick-up in the U.S. economy markets have been long waiting for.”
- Barclays (based on CNBC)
Pair’s Outlook
At the beginning USD/CHF was declining because of a tough resistance level represented by the monthly PP. But a series of strong fundamental news on the U.S. economy yesterday turned the pair around, resulting in a breach of 0.8813 and subsequently a test of the 55-day SMA. Unless 0.8838/31 stops the increased demand for the greenback, we could soon witness a test of the falling trend-line at 0.8881.
Traders’ Sentiment
In terms of positions, the situation in USD/CHF is similar to the one observed in USD/JPY, namely preponderance of longs (71%). The distribution between the buy and sell orders, on the other hand, is quite different—35% and 65% respectively.
This overview can be used only for informational purposes. Dukascopy SA is not responsible for any losses arising from any investment based on any recommendation, forecast or other information herein contained.
Recommended Content
Editors’ Picks
AUD/USD stays directed toward 0.6500 as RBA's Bullock speaks
AUD/USD is extending losses toward 0.6500 in Asian trading on Tuesday. The Aussie Dollar remains offered after the Reserve Bank of Australia extended the pause. Markets digest the less hawkish policy statement while Governor Bullock's press conference gets underway.
USD/JPY recaptures 150.00 after the expected BoJ rate hike
USD/JPY extends gains to regain 150.00, as the Japanese Yen stays vulnerable amid a classic 'sell the fact' trading on the hawkish BoJ decision. The BoJ lifted the interest rate by 10 basis points (bps) from -0.1% to 0% for the first time since 2007 and abandoned the YCC framework.
Gold price hangs near one-week low, looks to Fed decision on Wednesday for fresh impetus
Gold price struggles to capitalize on the previous day's bounce from the $2,145 region and oscillates in a range during the Asian session on Tuesday. Hawkish Fed expectations, elevated US bond yields and a bullish USD cap the upside.
Bitcoin price shows weakness, but new BTC whales have created solid support at $56,400
Bitcoin price downside momentum continues to gain strength, giving sidelined and late bulls a chance to buy the dip. The market remains focussed on the oncoming halving, expected to kick off the next bull cycle.
Lots of tension ahead of this week's Fed decision
Last week, we got a strong round of US economic data accompanied by hotter US inflation reads. The takeaway of course is that there might be a lot more pressure on the Fed to be looking to scale back its rate cut outlook at this week’s meeting.