EUR/USD dips to 1.33

Technical Analysis

EUR/USD dips to 1.33

“The euro looks particularly weak. Investment into the euro zone could stall. I feel it's time to think that the euro will fall below $1.30.”

- Kyosuke Suzuki, Societe Generale (based on CNBC)

• Pair’s Outlook

  EUR/USD, as suggested by the near-term technical indicators, has finally broken 1.3350 to the downside, which allowed it to re-test the 2013 Q4 low at 1.33. Although this support is reinforced by the monthly S1 and the monthly studies lean to the bullish side, the bias will remain negative presumably until the 2013 September low at 1.31 is reached. But at the same time the resistance at 1.35 (major down-trend) must stay intact.

• Traders’ Sentiment

  Some of the market participants start viewing the Euro as oversold and enter counter-trend positions—the share of the long positions increased from 54 to 57%. At the same time there is no difference between the amounts of buy (49%) and sell (51%) orders.

GBP/USD down at 1.66

“With dovish comments from BoE Governor Mark Carney last week, this fall in inflation will provide the monetary policy committee with even more reason to hold out for first-quarter 2015 before tightening monetary policy.”

- UKForex (based on Reuters)

• Pair’s Outlook

  After being fairly quiet on Monday the Sterling effortlessly pierced a number of significant supports yesterday, including the May low and monthly S2 at 1.67 and 1.6650 respectively. Since there are no more important demand zones nearby, the price is expected to move even further South, regardless of the ‘buy’ signals on the monthly time-frame. Once the monthly S3 at 1.6450 is broken, the 2014 low at 1.6250 is likely to be targeted next.

• Traders’ Sentiment

  Traders take advantage of lower prices and mostly bet on a reversal—64% of open positions are long. Concerning the orders, a majority (59%) of them is set to purchase the British Pound against the Greenback.

USD/JPY rallies through 103

“The attractiveness of U.S. financial markets relative to the euro area and Japan has increased investor interest in the U.S. as a place to invest and boosted the value of the U.S. dollar.”

- Wells Fargo Advisors (based on MarketWatch)

• Pair’s Outlook

  The U.S. Dollar is strengthening across the board, as evidenced by USD/JPY surging above the July high. However, the currency pair is yet to close above 103 in order to confirm its intentions to advance further. The next objective could by the monthly R1 at 103.50, but a major test of the current upward momentum will be at 104—the highest point reached during the previous quarter. Meanwhile, most of the indicators are bullish.

• Traders’ Sentiment

  The SWFX market participants got encouraged by the pair’s recent performance and jumped on the bandwagon. As a result, three out of four open positions are now long. As for the orders, 63% of them are to sell the Dollar.

USD/CHF gains momentum ahead of 0.91

“Currency markets may be pricing in an earlier-than-expected interest rate increase by the Fed ahead of the minutes. The dollar continues to be bought.”

- Sumitomo Mitsui Banking (based on Bloomberg)

• Pair’s Outlook

  The rate has just broken the upper boundary of the flag pattern to the upside, meaning the current rally should at least extend up to the 2013 Nov 7 high at 0.9250. However, we should still be wary of the troublesome resistance at 0.91, as it has already prevented appreciation of the Buck on several occasions earlier this month. Should the bears gain the upper hand, the support at 0.90 will have to intervene and revitalise the bullish momentum once again.

• Traders’ Sentiment

  The distribution between the bulls (74%) and bears (26%) remains completely unchanged compared to the yesterday’s report. In the meantime, the buy orders enhanced their advantage (from 61 to 75%) over the sell commands.