EUR/USD lacks confidence to gain value

Technical Analysis

EUR/USD lacks confidence to gain value

“Having seen how the bounce in oil prices coincided with the bounce in the euro against the dollar, I’m starting to take this relationship more seriously.”

- SLJ Macro Partners LLP (based on Bloomberg)

• Pair’s Outlook

  Yesterday, EUR/USD slipped below the 55-day SMA/weekly PP and is currently fluctuating around the 1.0940 level. It seems that bulls are not convinced in the pair's ability to rally, even though a close above 1.0960 will provide an opportunity for a jump towards the 100-day SMA at 1.1082. However, a failure to increase in value may result in a sell-off down to the recent low at 1.0820. Meanwhile, daily and monthly technical indicators assume the latter scenario is going to take place.

• Traders’ Sentiment

  The gap between long and short positions at the SWFX market increased slightly, as bulls are keeping 46% of all opened positions, down one additional percentage point from yesterday.

GBP/USD encounters a large obstacle

“Dollar demand [is] returning fueled by a gradual improvement in the outlook for the US economy. The data is slowly turning better and importantly the rhetoric from the Fed suggests continued confidence that the economic recovery remains on track.”

- Bank of Tokyo Mitsubishi (based on WBP Online)

• Pair’s Outlook

  Yesterday the Sterling suffered a rather heavy loss against the US Dollar. Nonetheless, the support cluster around 1.5190 was able to prevent the GBP/USD pair from falling deeper. Even though this cluster should turn the tide for the Cable, there is a high chance that it will be breached due to poor fundamental data today. The worst-case scenario is a slump to 1.5140, namely the Bollinger band, while a hike back to 1.5250 is also possible. Technical studies, however, a suggesting the Pound is to decline again.

• Traders’ Sentiment

  First time in more than two months market sentiment shifted to the bullish side, as 53% of all positions are now long. The share of buy orders edged back up to the last week’s level of 57%.

USD/JPY attempts to stabilize above 125

“Some profits were taken on the dollar last weekend, but cash demand remains strong. The feeling in the market is to give 125 yen a try.”

- Societe Generale (based on CNBC)

• Pair’s Outlook

  The US Dollar appreciated against the Yen for another day, but was unable to reach the resistance at 125.00. Despite closing trade under the nearest resistance level, the USD/JPY still experienced a significant gain. Technical indicators are giving mixed signals, but we still expect the Greenback to edge higher. Immediate resistance now rests at 125.32, but the pair is likely to settle just over the 125 psychological level.

• Traders’ Sentiment

  Market sentiment among SWFX traders weakened again, as only 53% of traders now hold long positions (previously 54%). The number of purchase orders slid to its Friday’s level of 56%, down from 59% yesterday.

XAU/USD unchanged after spike in volatility

“The lack of follow through buying after clearing $1,200 is a worrying sign for the yellow metal and it looks again likely to test a break lower through the broad $1,180 to $1,185 support range.”

- MKS Group (based on CNBC)

• Pair’s Outlook

  The yellow metal traded in the turbulent environment in course of the trading session on Monday. Initially, the bullion managed to climb above the 1,195 supply area and even surpassed the 1,200 mark to reach its daily high at 1,204. However, US fundamentals provided the Greenback with bullish impetus, and gold fell back to 1,190 by the end of daily trading. A failure to consolidate above the resistance zone may signal about lack of bullish strength under existing fundamental conditions. Moreover, judging from weekly and monthly technical studies, the metal is likely to resume losing value in the medium-term perspective.

• Traders’ Sentiment

  Advantage of bulls over bears at the SWFX market decreased noticeably from yesterday, as the total share of long opened positions slid by eight percentage points, down from 63% to 55%.