USD/JPY remains contained in a narrow trading range

Technical Analysis

EUR/USD's rise capped by weekly PP

“The employment cost index could be more important than GDP in the collective mind of the financial markets.”

- Deutsche Bank (based on MarketWatch)

• Pair’s Outlook

  On Thursday, the common currency rebounded slightly and partly erased losses that were gained back two days ago. EUR/USD cross has even tried to push itself above the weekly pivot point 1.1332 but all attempts turned to be unsuccessful. Therefore, the daily closing level was located at 1.1319, 13 pips below the mentioned resistance. It is likely that the Euro will make a second attempt to penetrate this level today, even despite bearish technical studies.

• Traders’ Sentiment

  Distribution between long and short opened positions on EUR/USD pair is remaining unchanged for a fourth consecutive day at 49% vs 51%, correspondingly. At the same time, commands to acquire the Euro in 100-pip range returned to Tuesday’s level of 31%.

GBP/USD slides to 1.5050

“The Fed hasn't really pushed back against rate hike expectations and we've seen initial jobless claims which were much better than expected today and the dollar can therefore find a bit of an underpinning.”

- Rabobank (based on Reuters)

• Pair’s Outlook

  The support at 1.5150, mainly represented by the monthly S3, failed to underpin the Cable amid yesterday’s fundamentals and allowed the currency pair to plunge down to 1.5050, namely the weekly PP. Thus the Sterling missed an opportunity to re-test the up-trend at 1.53 in the nearest future and is therefore poised to extend the sell-off. One of the nearest targets is 1.49, followed by one of the major demand areas at 1.48 (2013 low).

• Traders’ Sentiment

  Depreciation of the Pound did not have a noticeable effect on the SWFX sentiment: 57% of open positions are long. At the same time, the difference between the buy (46%) and sell (54%) orders is insignificant, it is less than 10 percentage points.

USD/JPY remains contained in a narrow trading range

“The U.S. dollar is the only currency that is not associated with rate cut expectations.”

- Mizuho Bank Ltd. (based on Bloomberg)

• Pair’s Outlook

  USD/JPY keeps fluctuating around 118, as it still lacks momentum. Nonetheless, as long and the support at 116 stays intact, the long-term outlook will be considered bullish, though there are formidable resistances overhead: 119, 121 and 122. If the key demand level is violated, the outlook will be changed to negative, though there are formidable supports at 115 and 113, represented by the 100-day SMA and up-trend, respectively.

• Traders’ Sentiment

  The SWFX sentiment remains bullish, but right now there are relatively less long positions (60%) than yesterday (65%), despite the volatility being decreased. The share of buy orders contracted as well, namely from 60 to 51%.

XAU/USD plunges to minimum in 11 days

“The overriding theme for the next 12 months for precious metals is that there's going to be a lot more liquidity that's being added to the system via the ECB and the U.S. economy is going to have to continue to outperform in order to attract investment dollars.”

- ANZ Banking Group (based on CNBC)

• Pair’s Outlook

  The most significant decline of XAU/USD cross since December 15 took place on Thursday of this week. Due to strong US fundamentals, Gold dropped around $30 per ounce to fall below the 50% Fibonacci retracement at $1,260. Total daily losses, in turn, were only stopped by 55-day SMA around $1,252 and the precious metal rebounded slightly to close the trading at $1,257. Following that, daily technical indicators stopped giving bullish signals on Gold as they are now staying neutral with respect to metal's perspectives.

• Traders’ Sentiment

  Sentiment towards the precious metal is remaining strongly positive among SWFX traders, as share of bullish trades is currently staying at 73%, without any changes from yesterday.