USD/JPY keeps moving to three-month low

Technical Analysis

EUR/USD strengthens a drop below 1.0750

“More recently the US dollar has underperformed especially against the euro during less favorable conditions for global investor risk sentiment as long US dollar positions have been reduced.”

- Bank of Tokyo-Mitsubishi (based on WBP Online)

• Pair’s Outlook

  EUR/USD was down for a third session in a row on Tuesday. The currency pair was hammered by depressing European fundamentals, which led to a dip below the second daily support of 1.0750 (weekly S2. Alongside, the first demand was easily eroded near 1.08. Now the mid-term focus shifts to the area just above 1.05, where both December and April lows lie. Intermediate support for the bulls should be offered by weekly S3 and monthly S1 and 1.0669 and 1.0565, respectively. Meantime, any revival will be complicated by the downward-sloping 55-day SMA, currently at 1.0841.

• Traders’ Sentiment

  Open positions on the EUR/USD currency pair are broadly flat for a seventh consecutive working day, meaning the overall bearish advantage holds at 14% (43% bullish share vs 57% bearish share).

GBP/USD closing in on 2015 low

“Sterling's consistent underperformance over the last month is hard to rationalise. For now, we are not prepared to fight the solid negative trend in GBP, though our medium term outlook remains positive.”

- RBC (based on Business Recorder)

• Pair’s Outlook

  The Cable edged lower for the sixth time in a row on Tuesday, but without the immediate support cluster getting violated. However, this cluster weakened today and is under the risk of getting pierced, as the Bollinger band inched significantly lower and is now reinforcing the cluster around the 2015 low of 1.4565, which in turn should limit the losses. At the same time, a possibility for the bullish momentum to be regained exists if the US fundamental data disappointing, thus, weakening the US Dollar versus the Pound.

• Traders’ Sentiment

  More traders (62%) retain a positive outlook towards the Sterling today, compared to only 51% on Tuesday. Meanwhile, the portion of orders to acquire the GBP lost 6% points, falling down to 57%.

USD/JPY keeps moving to three-month low

“If the upcoming U.S. job data [on Friday] disappoints investors, risk appetite will not come back for a while.”

- Shinsei Bank (based on CNBC)

• Pair’s Outlook

  The USD/JPY currency pair failed to rebound on Tuesday, due to the continued sell-off in the Chinese equity market. In wake of this event, the pair inched closer to the 119.00 level, which is likely to be breached today, as another set of weak Chinese fundamentals sparked risk aversion. The immediate support around 118.90 will doubtfully hold the losses, leaving the door open for a decline towards the Oct low at 118.06. Nonetheless, a positive surprise in US data later today could trigger a buying spree, help the Greenback negate daily losses and even cause trade to close in the green zone.

• Traders’ Sentiment

  Traders remain confident in the USD/JPY underperformance, with 60% of all positions are long. Purchase orders surged from 52 to59%.

Gold closes above downtrend, exposes 1,084

“A stronger U.S. dollar crimped investor demand.”

- Australia & New Zealand Banking Group Ltd. (based on Bloomberg)

• Pair’s Outlook

  The bullion spent another trading session in a positive way, as the bulls were strong enough to push prices above 1,075 yesterday. As a result, the two-month downtrend line was crossed and now we are focusing on the next resistance area at 1,084. This one is considered to be much more important, as we are dealing with 55-day SMA, upper Bollinger band, weekly R2 and monthly R1. To violate this supply zone, the traders are likely to require a boost from fundamentals. Today the US ADP employment is due, and a negative surprise will provide gold with an opportunity to rally.

• Traders’ Sentiment

  Following a loss of two percentage points on Tuesday, the total number of SWFX bullish positions stabilised near 54% by Wednesday morning.

•  Download Full Daily Forex Technical Overview

  Don't miss our new daily forecasts for EUR USD, GBP USD, USD CAD and USD JPY!