EUR/USD hovers below monthly S2

Technical Analysis

EUR/USD hovers below monthly S2

“The price action is consistent with our expectation that longer-term oriented market participants will be keen to buy USD above $1.10 and we suspect that underlying flows from euro zone investors will continue to limit scope for EUR rallies.”

- BNP Paribas (based on CNBC)

• Pair’s Outlook

  On Tuesday, EUR/USD has initially succeeded in crossing the major resistance line at 1.0942, represented by the monthly S2. It was the second attempt to overcome this important level and the pair has even surged above 1.10. However, bearish pressure returned to the market and the Euro dropped back below this level towards the end of trading day. Taking into account current trading range (just between monthly S2 and 20-day SMA) and mix of fundamental news, the pair is likely to trade sideways on March 25.

• Traders’ Sentiment

  Bullish opened positions at the SWFX market are accounting for 44% this morning, down one percentage point from Tuesday.

GBP/USD plunged, but still above the 2013 low

“Interest rates in Britain are likely to rise despite inflation falling to zero.”

- Bank of England (based on FX Street)

• Pair’s Outlook

  The Sterling declined for the second day yesterday, although the 2013 low remains unconquered. GBP/USD easily pierced through the initial support and extended the losses. Ultimately, the Pound settled at 1.4848, just 40 pips away from the 2013 low. The technical indicators are strongly bearish, suggesting a further slump versus the Greenback. Nevertheless, fundamental factors are expected to weigh on the Buck today, which may strengthen the British currency. The nearest resistance level rests at 1.4918, while the closest support level remains the 2013 low.

• Traders’ Sentiment

  The long positions backed down to their Monday’s level of 48%, and the portion of buy commands also slid, from 54% to 49%.

USD/JPY recovered much slower than expected

“The yen is likely to remain weak as flows from the 'three pension funds' will keep up the pressure once buying from GPIF begins petering out.”

- Mitsubishi UFJ Securities (based on Reuters)

• Pair’s Outlook

  On Tuesday, the US Dollar appreciated against the Japanese Yen, although not as much as anticipated. USD/JPY added only five pips and was nowhere near any resistance during the trading day. However, a decline is likely to take place today, due to an expectation of a reduction in the US Durable Goods Orders, while the technical studies retain their mixed signals. Closest support lies among a cluster of important levels around 119.00, which is highly unlikely to be breached.

• Traders’ Sentiment

  Liquidity consumers’ confidence improved, as 63% of traders are now long the Dollar (previously 59%). Meanwhile, the percentage of buy orders remains unchanged at 62%.

XAU/USD rose for fifth consecutive day

“After last week’s short-covering rally, gold is doing nothing of much overall.”

- BullionVault (based on MarketWatch)

• Pair’s Outlook
  
  XAU/USD has been approaching an important down-trend line during past five days, by registering constant daily gains. On Tuesday, Gold jumped additional five dollars per ounce to reach 1,195. At the same time, it seems that bullish momentum is waning. The closest resistance is located at 1,198 and is reinforced by Jan-Mar down-trend line and weekly R1. These lines are expected to send the bullion back to the south. However, a medium-term potential decline should be limited by demand around 1,180 (2013 low and 20-day SMA).

• Traders’ Sentiment

  Sentiment towards the precious metal is optimistic among SWFX traders as the total share of bullish positions (67%, -1% since Tuesday) has a strong advantage over the bearish ones at the moment.