EUR/USD to remain under bearish pressure

Technical Analysis

EUR/USD to remain under bearish pressure

“But we think they [ECB] will [add stimulus], which should take euro-dollar down to $1.05 ahead of Dec. 3, and we picture ending the year at parity.”

- Goldman Sachs (based on Bloomberg)

• Pair’s Outlook

  After penetrating the seven-month downtrend line, the EUR/USD currency pair is going to remain under bearish pressure, even though it showed some gains yesterday. A revival failed to send the cross above 1.10, where it should have met the monthly S1 at 1.1022 and the downtrend itself around 1.1060. Therefore, any further rallies are expected to remain tepid and unsustainable. In addition, a close below the 1.0870 support level (monthly S2/weekly S1) and next demand at 1.0819/08 is necessary, in order to confirm negative trend of EUR/USD. Weekly and daily indicators keep mixed views on the matter.

• Traders’ Sentiment

  Share of bullish open positions rose from 52% to 54% in the SWFX market, while 100-pip long pending orders now account for 52%.

GBP/USD attempts to close the week above 1.53

“This short term move higher will primarily be heading for the recently broken flag floor, which now should act as firm resistance at 1.5360.”

- SEB (based on PoundSterlingLive)

• Pair’s Outlook

  Poor US GDP data weighed on the Greenback yesterday, helping the Cable recover from Wednesday’s losses. The 1.53 major level is now the immediate support, also bolstered by the monthly PP. If breached, the weekly S1 is likely to take action for the last time this week, holding the losses. Meanwhile, the 20 and 200-day SMAs are providing resistance around 1.5340; unless the US fundamentals disappoint again today, gains should be capped by this area. The 55-day SMA is the next target at 1.5380, reinforced by the weekly PP.

• Traders’ Sentiment

  Positions are equally divided between the long and the short ones. At the same time, the number of purchase orders experienced a significant decline, from 74 to 26%.

200-day SMA keeps USD/JPY afloat

“While the Bank of Japan refrained from announcing more stimulus at today’s meeting, we think that the recent recovery in inflation will stall soon. The upshot is that further monetary easing is still likely to be required.”

- Capital Economics (based on WBP Online)

• Pair’s Outlook

  The BoJ leaving its monetary policy unchanged in spite of weak inflation data caused rather strong downside volatility in the USD/JPY this morning. However, a broadly stronger US Dollar remained unchanged against the Yen yesterday, when GDP figures disappointed, and it is not allowing the Japanese currency to maintain trade below the 121.00 level today. The worst case scenario is a drop to 120.20, the area between the 20 and 55-day SMAs, but technical studies suggest a rally. Gains are likely to be limited by the 100-day SMA and Aug 27 high around 121.80.

• Traders’ Sentiment

  More traders retain a negative outlook towards the Buck, namely 62%. The share of buy orders, however, increased from 74 to 78%.

Gold leaves support eroded at 1,147

“Gold bulls must be reeling.”

- TD Securities (based on Wall Street Journal)

• Pair’s Outlook

  US Dollar continued to strengthen at the expense of gold prices on Thursday. XAU/USD slumped below 1,150 and erased the monthly R1/weekly S2 at 1,147/46. The bullion is required to consolidate below both of them and start testing 55/100-day SMAs at 1,140 in the nearest future, in order to underpin medium term bearish expectations. On the other hand, 55-day SMA has just crossed 100-day moving average to the upside, meaning market sentiment is now shifting in favour of bulls. Moreover, weekly studies are sharing bullish views with respect to gold.

• Traders’ Sentiment

  After seven consecutive days of stagnating SWFX market sentiment, bulls have eventually managed to push their share up to 54% on Thursday.

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