EUR/USD hesitant ahead of 1.14

Technical Analysis

EUR/USD hesitant ahead of 1.14

“It will not be easy for the dollar to enter an uptrend again without evidence of rising wages, and focus is already turning to next Friday's jobs data.”

- IG Securities (based on Reuters)

• Pair’s Outlook

  Despite immediate resistance at 1.1368, represented by the weekly PP, there is still some room left for the Euro to appreciate in the short term. The gains, however, should be capped at 1.14, where supply is implied by the multi-week trend-line. Meanwhile, 1.13 is the key support level, which has been keeping the exchange rate afloat since the beginning of February. As suggested by the technical studies, this demand area should eventually give in.

• Traders’ Sentiment

  Just as yesterday, there is still no real difference between the amounts of bulls (49%) and bears (51%) in the SWFX market. On the other hand, there was a notable decline in the percentage of sell orders, and 1.14 may thus not be as strong as initially assumed.

GBP/USD rallies further

“With the first tier data behind us, GBP may be relatively sidelined and take greater cues from the USD.”

- Citigroup Inc. (based on CNBC)

• Pair’s Outlook

  Sterling’s performance exceeded expectations yesterday, as the GBP/USD currency pair edged closer to the weekly R2 level. However, the cross appears to be trading in a rising wedge and is closing in on its peak. Hence, the Pound is likely to cross the lower support trend-line of the pattern, possibly on Friday, as the pair approaches a cluster around 1.560. The market sentiment, which was deteriorating during the week, strengthens this views.

• Traders’ Sentiment

  As mentioned above, the number of bears is increasing, with today’s short positions standing at 46%. Moreover, the number of orders to acquire the Pound in the 100-pip range also remains low, as only 45% are set to purchase the Sterling.

USD/JPY holding steady

“If U.S. data begins to positive surprise once more, the market will quickly jump back on to the 'Buy USD' bandwagon.”

- NAB (based on Reuters)

• Pair’s Outlook

  On Wednesday the USD/JPY cross attempted to decline, but was unable to breach the 20-day SMA. As a result, the losses were not as severe, the pair lost only 11 pips before settling just under the weekly PP. Meanwhile, the technical indicators are giving mixed signals, although the majority of them is bullish. The Buck is likely to regain momentum, whereas any decline will be short-lived. The pair also might meet resistance, namely the weekly R1 at 119.50.

• Traders’ Sentiment

  Since yesterday the market sentiment remains unchanged, as bulls still prevail over bears with 59% of the market. At the same time, the number of buy orders contracted eight percentage points, and now they account for 61% of all commands around the spot.

XAU/USD well-supported at 1,200

"Chinese traders returning from their week-long Chinese New Year holiday, plus the temporary dip below $1,200 on Tuesday, prompted bargain hunting and short-covering in gold by investors.”

- Phillip Futures (based on Bloomberg)

• Pair’s Outlook

  XAU/USD is currently extending Wednesday’s rally from 1,200, but it may encounter fierce resistance between 1,215.80 and 1,211.90, where the weekly PP merges with the 100-day SMA. If this area fails as a ceiling, another high concentration of selling orders is supposed to be near 1,226, where the weekly R1 joins forces with the 20- and 55-day SMAs. Meanwhile, taking into account the monthly technical indicators, the overall bias with respect to gold is bearish, meaning 1,200 is unlikely to remain the lower boundary of the trading range in the long run.

• Traders’ Sentiment

  The SWFX market is becoming less optimistic regarding the bullish potential of the precious metal, though the bulls are still in a distinct majority. While yesterday 69% of all traders were expecting the price to increase, today already 65% of open positions are long, which is below the 10-day average of 62%.