EUR/USD resumes a decline on Greek risks

Technical Analysis

EUR/USD resumes a decline on Greek risks

“The Fed [will be] achieving one of its goals with the low unemployment rate, but they'll be missing the other one. That's what makes it so uncertain.”

- Bank of America (based on CNBC)

• Pair’s Outlook

  Following two days of gains, EUR/USD pair decided to resume losing value and plunged considerably on Wednesday. All in all, the cross dropped 94 pips during the trading session, thus crossing a support represented by the weekly pivot point at 1.1332. At the moment there is no major background for the Euro to advance. It proclaims that the current down-trend is likely to extend at least down to this year's low at 1.1115 in the near term.

• Traders’ Sentiment

  Distribution between long and short opened positions on EUR/USD pair is completely unchanged for a third day in a row and stays at 49% vs 51%, respectively. At the same time, commands to buy the Euro in 100-pip range dropped again to reach just 29% this morning.

GBP/USD retreats to monthly S3

“The markets were a bit surprised that the Fed was more hawkish than expected, especially considering that many people had thought that the board members this year would be more dovish than last year's.”

- Okasan Securities (based on Reuters)

• Pair’s Outlook

  GBP/USD pared some of the latest gains, but the pair is nonetheless in a good position to advance towards 1.53, namely the seven-month down-trend, as the support at 1.5150 stays intact. Alternatively, if the monthly S3 gets breached, the Sterling will likely decline to the weekly PP at 1.5050. However, the sell-off will have a low chance of stopping here, being that eventually the Cable should approach the 2013 low at 1.48.

• Traders’ Sentiment

  The SWFX market seems to ignore price fluctuations for now, as the sentiment still does not exhibit sensitivity to changes in GBP/USD, 57% of open positions are long. At the same time, the difference between the buy and sell orders remains insignificant (-4 pp).

USD/JPY steps further away from 119

“All roads lead to a higher U.S. dollar. The Fed’s the only one that people can see tightening this year.”

- Commonwealth Bank of Australia (based on Bloomberg)

• Pair’s Outlook

  Since the support at 118 failed to withstand the selling pressure, USD/JPY is now exposed to a decline to 116.0/115.5, where the monthly S1 level is reinforced by the 38.2% Fibo. This zone should act as a floor in the medium term and prevent any attempts of the bears to push the price lower. The US Dollar still retains a notable bullish potential and in the long run should surpass the 2014 peak at 122, which in turn may open a path to the 2007 high at 124.

• Traders’ Sentiment

  The current share of bulls is slightly lower than it was yesterday, but this does not change the overall picture, a considerable majority of traders holds long positions (65%). The percentage of buy orders dropped as well, but to a greater extent, from 64 to 60%.

Weekly pivot point pushes Gold below $1,285

“Amazingly, people are paying Switzerland to warehouse their money for 10 years...That makes gold a high-yielder, because it yields zero. So you’re in a world that is being incrementally favorable for gold.”

- a bond trader at Doubleline Capital (based on MarketWatch)

• Pair’s Outlook

  On Wednesday, the precious metal traded mostly in the narrow range between monthly R2 and 61.8% Fibo around $1,285, while the latter level limited any gains proposed by bulls. However, in the night between Wednesday and Thursday the gold fell even below the monthly R2. The closest support for XAU/USD is strengthened by down-trend and weekly S1 which are unlikely to give up easily. Therefore, even despite bullish technical indicators and positive market sentiment, the metal will most probably stay range bound for some period of time in the nearest future.

• Traders’ Sentiment

  Sentiment towards the precious metal is remaining strongly positive among SWFX traders, as share of bullish trades is currently staying at 73%, down slightly from the time our last report was published yesterday.