EUR/USD rallies towards 55-day SMA

Technical Analysis

EUR/USD rallies towards 55-day SMA

“The bulk of the compromise comes from the Greek side. If we’re wrong and there is a Grexit, that’ll certainly hurt the euro, at least in the short term.”

- JPMorgan Chase & Co. (based on Bloomberg)

• Pair’s Outlook

  EUR/USD rallied for a third consecutive day on Monday as the single European currency is targeting the 55-day SMA, currently at 1.0930. However, a move significantly beyond this mark is unlikely. Additional resistances are located at 1.1040 and 1.1098, represented by March/April highs and January low, respectively. Therefore, the outlook for the Euro's short-term development remains bearish, unless the pair consolidates above 1.11 (monthly R1) in the foreseeable future.

• Traders’ Sentiment

  Distribution between long and short positions at the SWFX market remains biased in favour of the latter, as bulls are currently in the minority with only 44% of all opened positions.

GBP/USD rises ahead of UK GDP

“Relatively high UK yields are lending GBP some support. However, the pound is vulnerable to political uncertainty in the approach to the May 7 UK general election.”

- Rabobank (based on WBP Online)

• Pair’s Outlook
  

  Yesterday, despite some troubling volatility to the downside, the GBP/USD pair still ended the trading session with a rally. The Cable managed to overcome the 1.52 level and even went over the Bollinger band, before stabilising at 1.5221. Technical studies are suggesting further rally today, in spite of weaker GDP data expectations. A strong resistance cluster around 1.5290 should limit gains, while we should not rule out the probability of a fall back to 1.51 due to possible improvements in US fundamentals.

• Traders’ Sentiment

  SWFX traders’ outlook towards the Sterling improved, as the share of longs increased by four percentage points, up to 45%. The number of buy orders retreated to its last Thursday’s level of 42%.

USD/JPY awaits Consumer Confidence

“But if the Fed should downplay recent U.S. weakness and keep a rate hike on the table, the dollar would have a better base on which to strengthen.”

- Western Union Business Solutions (based on CNBC)

• Pair’s Outlook

  On Monday, the USD/JPY pair surged according to expectations. Even though the US Dollar managed to go over 119.40, it closed at 119.12, just two pips higher than the forecast. The Greenback edged closer to a group of resistances, which might turn the tide for the given currency pair. Technical indicators are showing bearish signs, bolstering the negative outcome. A fall beyond 119 is the likely outcome; however, a surprising hike in the US fundamentals might trigger further rally towards 119.50.

• Traders’ Sentiment

  Market sentiment remained unchanged, with 72% of traders still being long the Buck. The portion of purchase orders added five percentage points and now account for 58% of the market.

XAU/USD jumps most in three months

“I'm bearish until gold settles at $1,230 ... every time you get up there, there's a major wall of selling that comes into the market.”

- Phoenix Futures and Options (based on CNBC)

• Pair’s Outlook
  

  Waiting for the meeting on the Federal Reserve on Wednesday, Gold has declined noticeably in the beginning of this week. Markets are expecting the Fed to postpone a rate hike due to economy's poor performance in the beginning of the year. From the technical point of view, major support for XAU/USD was created by the 2013 low, which denied the bears' idea of pushing the bullion below 1,180. However, the upper trend-line of April's down-trend remains in place; therefore, a bounce back in the short-term is not completely ruled out. Aggregate daily technical indicators, however, are broadly neutral at the moment.

• Traders’ Sentiment

  Advantage of bulls over bears at the SWFX market is considerable at the moment, as the former are dominating by keeping 73% of all opened positions, no change from yesterday.