USD/JPY: Correction to take place

Technical Analysis

EUR/USD drops down to 1.1035 before ECB meeting

“The ECB is doing what’s needed on the monetary side, but on the political side the clock is ticking.”

- Royal Bank of Scotland (based on Bloomberg)

• Pair’s Outlook

  After a considerable drop yesterday, EUR/USD continues declining on Thursday morning as well. On Wednesday it lost more than 100 pips and is getting additional 40-pip hit today. The Euro has already crossed weekly and monthly S1 support lines and approached the next demand zone at 1.1035 (weekly S2), where a new 2015 low has been set. If this level fails to act as strong support, a decline down to 1.0943 (monthly S2) is not off the table, depending on what Mario Draghi reveals today during the ECB meeting in Cyprus.

• Traders’ Sentiment

  Bullish opened positions at the SWFX market are accounting for 53% in the morning on Thursday. Additionally, pending orders to buy the Euro against the US Dollar in 100-pip range reached 58%.

GBP/USD keeps plunging

“I think the dollar may keep strengthening as we wait for the first rate hike in the U.S. ... The trend is in place.”

- Barclays (based on CNBC)

• Pair’s Outlook

  As the UK Services PMI was worse than expected, and later through the day the US data showed strong figures, the Pound came under strong selling pressure, and the currency depreciated dramatically. GBP/USD easily breached the support cluster at 1.5325 and ignored the 55-day SMA at 1.5304, before ending the trading day at 1.5262. Despite the technical indicators giving bullish signs, the price is likely to preserve downward momentum amid the anticipated strong US data. A significant nearby support is set around 1.5100.

• Traders’ Sentiment

  The share of long positions went down by nine percentage points to 60%. Meanwhile, the percentage of buy orders in the 100-pip range from the spot edged up, they now account for 54% of the market.

USD/JPY: Correction to take place

“When you combine these capital outflows with relatively higher U.S. yields, it does suggest dollar/yen remains fairly well supported.”

- Nordea Bank (based on Reuters)

• Pair’s Outlook

  On Wednesday the USD/JPY pair continued to trade between the weekly PP an R1 levels. The Greenback experienced a minor eight-pip slump, before the currency settled at 119.64. Although technical studies suggest a neutral outcome for Thursday, the Buck is still likely to edge up, as a correction must take place after a plunge. The nearest resistance and support levels remain unchanged, and the pair will most likely stay in the tight range between them.

• Traders’ Sentiment

  Bulls keep gaining advantage over bears, as 61% (previously 59%) of traders are optimistic about the US Dollar’s prospects. At the same time, the percentage of commands to acquire the Greenback added eight percentage points to 73%.

XAU/USD remains calm around 1,200

“Job growth is strong, but slowing from the torrid pace of recent months.”

- Moody’s Analytics (based on Reuters)

• Pair’s Outlook

  XAU/USD cross showed no significant changes in course of the previous trading day as it remained hovering just around the major level of 1,200. The closest resistance and support are located at 1,207 and 1,195, respectively and provide two boundaries for Gold in a rather wide trading range. Therefore, without impetus a move beyond any of these lines will be difficult to achieve. According to technical studies on a daily chart, a decline is more likely than an advance today, even though on a weekly basis an increase in the bullion's value is still more preferable.

• Traders’ Sentiment

  Sentiment toward the precious metal is remaining optimistic among SWFX traders, even though a total share of bullish positions (55%) is not as high as several days before and has no changes from yesterday.