EUR/USD Analysis: opens lower after Greek referendum

Technical Analysis

EUR/USD opens lower after Greek referendum

“A ‘no’ vote in the Greek referendum isn’t good news, so the initial reaction to sell the euro is the right one.”

- Credit Agricole (based on Bloomberg)

• Pair’s Outlook

  EUR/USD has been considerably sold off in the morning on Monday after a quiet trading session last Friday, as market participants are pricing in results of the Greek referendum. Despite that, the pair found a support at the last week's low around 1.0970, while there appears a reluctance to move further downwards. The immediate resistance for bulls is placed at 1.1114 (weekly PP). On the contrary, potential losses can allow a drop down to 1.0875 (monthly S1).

• Traders’ Sentiment

  The share of SWFX long open trades has been unchanged at 49% during the past 72 hours, as the sentiment is still somewhat neutral. Meanwhile, pending orders to buy the Euro against the US Dollar in 100-pip range from the spot plunged to 36% over the weekend.

GBP/USD anchored around 1.5550

“Nevertheless, it seems that the MPC vote could be split by the end of the summer. Even so, we would argue that it would be some months before the majority of the committee vote in favour of a rate rise. We continue to favour steady policy until May 2016.”

- Rabobank (based on FX Street)

• Pair’s Outlook

  Despite better-than-expected UK fundamental data, the Cable still sustained losses at the end of last week. The strong support cluster around 1.56 was breached, as the pair extended its bearish two-week trend. The British Pound is expected to experience more weakness today and fall down to either around 1.55 or 1.5477, where the lower Bollinger band rests. Nonetheless, a possibility of a surge remains, but the earlier mentioned barrier, which is now providing resistance, will be hard to penetrate.

• Traders’ Sentiment

  Bulls keep prevailing over bears, as 59% of all positions are long today (previously 58%). The number of orders to acquire the Sterling, however, slid from 59 to 56%.

USD/JPY to attempt to reclaim 123.00

“Sentiment is driving ‘risk’ currencies lower and safe havens higher.”

- ANZ (based on WBP Online)

• Pair’s Outlook

  The US Dollar failed to withstand the pressure against the Yen, as pierced the 123.00 major level on Friday. However, the USD/JPY only reached a daily low of 122.60, rather than 122.40. On Monday, trade opened at the 122.40 mark, with light shining upon the Greenback, despite bearish technical studies. The 55-day SMA, located at the same area, is providing solid support, suggesting the Buck is to appreciate today. The immediate resistance now rests at 122.66, represented by the weekly PP, but the 123.00 psychological level might still be reached if the fundamentals are in favour.

• Traders’ Sentiment

  Bullish market sentiment returned to its Thursday’s level of 73%, while the share of buy orders edged up from 51 to 70%.

Safe-haven Dollar to send XAU/USD down

“The strength of the dollar as a haven continues, and investors may look beyond Greece to Fed rate action. This may be a headwind for gold.”

- RBC Capital Markets (based on Bloomberg)

• Pair’s Outlook

  The bullion gained value for the first time in four days last Friday, and the trading opened even higher around 1,174 Monday, pricing in the result of the Greek referendum. However, gains are likely to be slashed in the near-term, judging from the most recent downward price developments. The precious metal is also estimated to slump in the medium-term, according to the weekly technical indicators. The closest support is placed at 1,158 (Bollinger band), followed by the monthly/weekly S1 at 1,154.

• Traders’ Sentiment

  The share of long open positions at the SWFX market advanced moderately over the weekend, as it remains solid at 66%, while bears are in the minority with just 34% of all trades. Bullish share gained three percentage points in the past 72 hours.