EUR/USD plummets to 2014 low

Technical Analysis

EUR/USD plummets to 2014 low

“The market appears to be pricing in some expectation of sovereign quantitative easing at the next ECB meeting in two weeks.”

- RBC Capital Markets (based on CNBC)

• Pair’s Outlook

  Since EUR/USD confronted the falling resistance line last week and failed to violate it, the overall downward trend should remain intact. However, in order to confirm the long-term bearish intentions, the currency pair must push through the demand at 1.2360, represented by the monthly S1 and, even more importantly, this year’s minimum. Once this support is broken, the 2012 low at 1.2040 will highly likely become the next target.

• Traders’ Sentiment

  Although the share of long positions has increased over the weekend, the difference between the numbers of the bulls and bears remains insignificant—only eight percentage points in favour of the former.

GBP/USD is stuck to monthly S2

“The dollar is in the beginning of a multi-year strengthening pattern.”

- Deutsche Bank AG (based on Bloomberg)

• Pair’s Outlook

  The Cable keeps trading around its monthly S2 level, being limited by the resistance at 1.57 from the upside and the support at 1.56 from the downside. According to the near-term indicators, the bearish risks prevail and GBP/USD should update this year’s low; on the other hand, the monthly studies are mostly bullish, suggesting the key resistance at 1.5850 may soon give in. Either way, a breach of any of these levels is going to define mid-term Pound trend.

• Traders’ Sentiment

  The sentiment towards the Sterling is slightly more bullish than bearish, being that 56% of open positions are long. As for the pending orders, 58% of commands placed 100 pips around the spot are to sell the currency against the Greenback.

USD/JPY buoyed by demand at 117.30

“Still, the overall upside risks are intact with near-term pullbacks finding support at 117.05/00, before the 115.45/114.89 zone.”

- JPMorgan (based on Reuters)

• Pair’s Outlook

  USD/JPY is currently taking a break after a precipitous rally commenced in mid-October. And even though the one-and-a-half-month advance seems overstretched, the bulls do not let the Dollar to undergo a correction—the pair is currently well-supported by a combination of the weekly PP and monthly R2 at 117.30. Moreover, the technical indicators are pointing upwards, meaning the 2007 Oct high is soon to resign as a resistance level.

• Traders’ Sentiment

  The SWFX market participants stay undecided with respect to USD/JPY’s prospects—53% of traders expect the pair to move further north, and 47% of them reckon the Buck has climbed too far and must retreat.

USD/CHF uses 0.9550 as a springboard

“The initiative [requiring the central bank to hold a fixed portion of its assets in gold] is dangerous because it would weaken the SNB.”

- Thomas Jordan, SNB President (based on Bloomberg)

• Pair’s Outlook

  Having established a solid support at 0.9550, USD/CHF surged up to 0.9750, where the monthly R1 merges with this year’s highest trading level. Eventually, the obstacle should be overcome, and this will pave the way for a jump to the 2013 high at 0.8840, which is standing near the monthly R2 and a multi-month up-trend (connects Aug 17 low and Nov 6 high). If the bullish carry on pushing further, the next destination will be the 2012 peak at 0.9970.

• Traders’ Sentiment

  Since Friday the percentage of Dollar-optimists only grew—now they take up 65% of the market (63% on Friday). At the same time, a notable majority (64%) of the orders is set to purchase the Greenback against the Franc.