GBP/USD may reach 2014 low this quarter

Technical Analysis

EUR/USD supported by monthly S1

“We are seeing profit-taking ahead of the Jackson Hole speeches by Janet Yellen and Mario Draghi.”

- BK Asset Management (based on MarketWatch)

• Pair’s Outlook

  After three days of losses EUR/USD has finally found support at 1.3250, represented by the monthly S1 and weekly S3. However, unless the Jackson Hole changes the overall picture fundamentally, the rally is likely to be shallow, given there are now tough resistances at 1.33 and 1.3350. Once the current correction is stopped, the currency pair will be expected to resume moving towards the 2013 September low at 1.31.

• Traders’ Sentiment

  While there was no change in the distribution between the long (58%) and short (42%) positions, the share of sell orders placed 50 and 100 pips from the spot price leaped from 54 and 50% to 75 and 69% respectively.

GBP/USD may reach 2014 low this quarter

“I still like sterling against the euro but with this dollar strength I think the action yesterday and overnight showed you that its worth selling cable into any rally. The dollar is only getting stronger.”

- a dealer with one large bank in London (based on Reuters)

• Pair’s Outlook

  The rate of British Pound’s depreciation relative to the Dollar decelerated ahead of the support at 1.6550. Nevertheless, the bears should remain the main driving force and eventually push the exchange rate down to this year’s low at 1.6250. Though there is a strong intermediate level at 1.6450, formed by the weekly and monthly S3. In the meantime, every attempt of the Sterling to recover is likely to be prevented by 1.67.

• Traders’ Sentiment

  The SWFX market participants are currently net buyers of the Sterling, being that 63% of open positions are long and the remaining 37% are short. As for the orders, there is still no difference between the buy and sell ones.

USD/JPY’s upward momentum to be tested by 104

“Anything remotely less dovish than expected from Yellen should lift the dollar, and dollar/yen will be the front-runner there.”

- Nordea (based on CNBC)

• Pair’s Outlook

  The U.S. Dollar is getting closer to the last quarter’s peak, which is reinforced by the monthly R2 level, and it may prove to be difficult to break, even though most monthly indicators are presently bullish. The July high at 103 will be expected to keep the price afloat, in case there is intensive selling. But once USD/JPY surpasses 104, there will be few doubts the price is going to challenge 2014 high at 105.50 next.

• Traders’ Sentiment

  There are currently slightly more bullish traders (57%) than there are bears, although just a few days the gap amounted to more than 40 percentage points. Concerning the orders, the amounts of buy (49%) and sell ones (51%) are presently equal.

USD/CHF hits a ceiling at 0.9150

“Expectation that Fed Chair Janet Yellen’s speech will be less hawkish at today’s Jackson Hole meeting is triggering a weaker dollar. Investors are adjusting positions.”

- Suhyup Bank (based on Bloomberg)

• Pair’s Outlook

  Although the resistance at 0.91 is no longer in the way, now it is 2014 high that is forcing USD/CHF to take a step back. Ideally, the pair should stop retreating and launch yet another attack on 0.9150. But the Buck may need to retreat to 0.90 (up-trend, monthly PP and 55-day SMA) in order to start a recovery capable of extending through this supply area and open a path towards 2013 Nov 7 high at 0.9250.

• Traders’ Sentiment

  The sentiment of traders is now neutral with respect to USD/CHF—only 54% of positions are long. On the other hand, the percentage of orders scattered 50 pips from the spot set to acquire the Greenback soared from 45 to 81%.