EUR/USD ticks higher after Fed meeting

Technical Analysis

EUR/USD ticks higher after Fed meeting

“The Fed is really in a wait-and-see mode. They want to see if everything in the global economy and financial markets is really going to bleed through and affect inflation and their outlook for the economy.”

- Moody’s Analytics (based on Bloomberg)

• Pair’s Outlook
  

  A dense and difficult resistance cluster ahead of the spot makes the mid-term bearish scenario much more likely than the bullish one. Short-term volatility can be positive for the Euro, with gains having a chance to be extended up to Dec-Jan downtrend and 100-day SMA at 1.0954/75. If it gets no correction from here, then EUR/USD will be estimated to fail near 200-day SMA at 1.1053. Bears are determined to retake a Dec-Jan uptrend around 1.0840, followed by current January lows near 1.0715. A long-term focus is on the Dec low at 1.0521, as assumed by aggregate weekly/monthly indicators.

• Traders’ Sentiment

  SWFX bears remain in the majority of 55% for open positions. At the same time, 50-pip pending orders surged yesterday from 47% to 57% and are now expecting gains for the Euro.

GBP/USD prepares for a lift-off from 1.4230

“On a trade-weighted basis sterling did very well last year and given the concern over inflation and competitiveness, that strength was probably unwelcome.”

- Societe Generale (based on Reuters)

• Pair’s Outlook
  

  Yesterday, the Cable completed a pullback after it had breached the accelerated falling trend-line earlier this week. Accordingly, even though the indicators are bearish, there is a good possibility the currency pair will rebound from the new formidable demand area around 1.4230, consisting of the trend-line, 2010 low, and weekly pivot point. The target for the next several days is therefore at 1.44 dollars, where the monthly S2 merges with the weekly R1 and 20-day moving average.

• Traders’ Sentiment

  Cheaper Sterling spurred buying, and the share of longs in the SWFX market increased from 61 to 65%. However, the percentage of buy commands declined, from 58 to 45%.

USD/JPY to aim for 120.50 yen above monthly S1

“Overall, the [FOMC] statement reflects the caution that one would expect a central bank to use in the current volatile environment. But the Fed hasn't deviated from its previous message, with future moves in rates remaining in the hands of the incoming data.”

- ANZ (based on CNBC)

• Pair’s Outlook
  

  At the moment, USD/JPY appears to be on its way back to the major support trend-line the pair has recently (Jan 4) breached. The price exited the bearish channel (Nov 29-Jan 20) to the upside, meaning we are likely to see the latest rally developing until it hits the level of 120.50 yen. There supply is implied by a number of studies, including the mentioned broken trend-line and 55- and 100-day SMAs, which is sufficient to initiate a strong and prolonged sell-off.

• Traders’ Sentiment

  Yesterday’s FOMC statement did not have any effect on the sentiment in the SWFX market whatsoever. Just as 24 hours ago, 72% of open positions are short. Although the portion of buy orders increased, but insignificantly—from 58 to 61%.

Gold is at risk of correction from monthly R3

“A lot of investors weren’t buying the idea that there were going to be four rate hikes in 2016, and this certainly adds weight to that idea...it gave gold a boost.”

- OptionSellers.com (based on Wall Street Journal)

• Pair’s Outlook
  

  Gold booked another trading session of gains on Wednesday, after the Fed statement indicated lower probability of a rate hike in March. XAU/USD reached last monthly resistance (monthly R3) at 1,127. However, it failed to touch 200-day SMA slightly more from the upside. Asian session suggests a correction within the rising wedge pattern. This would allow for a selloff down to 1,085 in the medium-term. Initial bearish target for the next 24 hours is 100-day SMA at 1,104, which is guarded by weekly R1 and monthly R2 at 1,110/07. Nonetheless, daily technical indicators are calm and maintain mixed outlook.

• Traders’ Sentiment

  With 53%, the bullish SWFX market share slumped to the lowest level in three months.

•  Download Full Daily Forex Technical Overview

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