EUR/USD was stopped by 23.6% Fibo

Technical Analysis

EUR/USD was stopped by 23.6% Fibo

“Most of these hedged positions are over-hedged and they have to buy the currencies. We're of the school that you buy the dollar on dips.”

- Credit Agricole (based on Reuters)

• Pair’s Outlook

  EUR/USD advanced for a third working day in a row on Tuesday, but the cross failed to overcome the nearest resistance at 1.1295 (23.6% Fibo) and close above the 1.13 round level. According to daily technical indicators, additional testing of this mark is possible in the next 24 hours. However, positive US employment data may push the Dollar substantially upwards today. Additional bearish momentum is expected to be present, in case EUR/USD falls below 20-day SMA/yesterday low at 1.1225.

• Traders’ Sentiment

  The share of bulls rose further from 46% to 49% yesterday. In the meantime, the portion of long pending orders in 100-pip range from the spot price dropped from 61% to 53% in the past 24 hours.

GBP/USD stuck around 1.53

“GBP/USD has sold off to and has eroded the 200 day ma at 1.5362 and the 1.5330 July low – currently we suspect that we will see some consolidation at the 50% retracement at 1.5249 as we are not convinced that the market is quite ready to sustain another leg lower at this stage.”

- Commerzbank (based on FXStreet)

• Pair’s Outlook

  The Sterling fell to the lowest in in two months on Tuesday, as weak UK PMI data put pressure along with the plunging equity markets around the world. As a result, the support cluster around 1.5320 was pierced, with the trade closing at 1.53 major level. Even though the Cable remains supported by this psychological area, somewhat bolstered by the lower Bollinger band, risks of edging even lower still persist. However, today’s poor US fundamentals could help the British Pound recover yesterday’s losses, despite technical indicators remaining mixed.

• Traders’ Sentiment

  Today 56% of all positions are long (previously 53%), whereas the portion of purchase orders returned to its Monday’s level of 52%.

USD/JPY attempts to regain its bullish momentum

“Currencies will continue to closely watch equities, with the yen and euro boosted by unwinding of carry trades in such times of risk aversion.”

- Barclays (based on CNBC)

• Pair’s Outlook

  The US Dollar suffered more losses on Tuesday, amid weaker-than-expected fundamental data from both the US and China. The USD/JPY breached the immediate support cluster and ultimately fell under the weekly PP to 119.70. A rebound is likely to take place today, with the risk sentiment returning to the market. The nearest significant resistance is now the cluster around 121.00, namely the monthly PP and 200-day SMA; although the Greenback risks dropping deeper down if the fundamental data disappoints again today, causing a plunge under 119.00.

• Traders’ Sentiment

  Bulls are now in the majority, taking up 58% of the market (previously 46%). The share of buy orders edged up from 33 to 38%.

XAU/USD failed to overcome weekly PP

“We believe this is a consolidation situation with only a breach of $1,168 bringing in fresh buying.”

- ScotiaMocatta (based on CNBC)

• Pair’s Outlook

  Gold attempted to advance higher on Tuesday, but any gains were capped by the weekly pivot point at 1,140. In case bulls and unable to push the price above this resistance of medium difficulty, then a decline is going to be the main scenario in the near term. However, bears will have other obstacles to face on their way down including monthly pivot point, 55-day SMA and 2014 low in the range of 1,131-26. In case of success, we see the downtrend extending down to 1,117 (Aug 26). However, this development will largely depend on today's US fundamentals, namely the ADP employment change and factory orders.

• Traders’ Sentiment

  SWFX sentiment with respect to gold fell below 54% for the first time in two weeks, as bulls and bears are currently holding 53% and 47% of all open positions, respectively.