EUR/USD to recover Friday losses

Technical Analysis

EUR/USD to recover Friday losses

“What we’re looking out for this week is the dollar strengthening back again given that Fischer has failed to rule out a September rate hike.”

- Bank of New Zealand Ltd (based on Bloomberg)

• Pair’s Outlook

  EUR/USD increased pressure on bulls as it decided to retreat below the monthly R1 at 1.1196 on Friday. However, an immediate recovery above this important support during the weekend and on Monday is raising hopes a recovery will take place in the nearest future. At first, the common currency is required to consolidate above the Aug 28 opening price of 1.1242, while the next resistance is represented by the same day's high at 1.1309. Meanwhile, additional demand is also created by the 20-day SMA, currently at 1.1215, as well as strongly bullish daily technical indicators.

• Traders’ Sentiment

  The share of bulls stayed flat at 44% during the weekend. In the meantime, pending orders in 100-pip range from the spot price are divided equally between bulls and bears at the moment.

GBP/USD stays strong above 1.54

“The release of U.S. ADP employment on Wednesday and non-farm payrolls on Friday will be key in analysing the quantum of a September rate hike.”

- IG (based on Reuters)

• Pair’s Outlook

  Although the Sterling declined against the US Dollar on Friday, the Cable quickly rebounded and stabilised above the 1.54 major level over the weekend. Due to the lack of market movers today, the GBP/USD currency pair is likely to retain its position above the psychological level and possibly to keep rebounding to 1.5470. From below the Pound remains supported by the monthly S1 and the Bollinger band, which should prevent any volatility in that direction. Meanwhile, technical studies keep giving mixed signals, suggesting the British currency is to trade flat over the day.

• Traders’ Sentiment

  Both net orders and net positions remain unchanged since Friday, with 51% of traders being long and 52% of orders to buy the Pound.

USD/JPY in tight range between 200-day SMA and monthly S1

“We think September liftoff is not necessarily bad for risk sentiment. Given this view, we still maintain a view that markets will be risk-friendly, and hence look for further yen and euro weakness versus the dollar leading up to the first Fed rate hike.”

- UBS Wealth Management (based on CNBC)

• Pair’s Outlook

  The Greenback appreciated against the Yen for the third consecutive day last Friday, closing trade at 121.73. However, the bullish momentum appears to have vanished, as the pair began declining on the weekend. Right now the US Dollar is stuck between the monthly S1 and the 200-day SMA, with neither of the important levels giving in. The base case scenario is still a decline to as far as 120.50, as technical studies retain their bearish signals. Nonetheless, we should not rule out the possibility of a rally up to 122.00, amid a broadly weaker Japanese currency.

• Traders’ Sentiment

  The bullish traders increased from 59 to 62%, while the number of purchase orders, on the other hand, declined from 65 to 53%.

XAU/USD closes above 2014 low again

“We think gold will likely come under further pressure as we near the Fed decision, as investors coalesce around the notion that the central bank will indeed move.”

- INTL FCStone (based on CNBC)

• Pair’s Outlook

  After spending one full trading day (Thursday) below the 2014 low, the bullion gained enough momentum in order to be pushed back above this crucial technical level. Moreover, on Friday gold managed to close above the 1,131 mark, meaning that there is a chance of a continuous recovery. Supported by short term technical studies, bulls are expected to prolong a recovery up to the 100-day SMA/monthly R1 at 1,156 soon, while the next resistance seems to be placed at 1,170 (recent lows). On the other hand, bears are likely to benefit from the long term negative outlook for gold.

• Traders’ Sentiment

  SWFX sentiment with respect to gold fell one extra percentage point over the weekend, as bulls and bears are currently holding 54% and 46% of all open positions, respectively.