GBP/USD risks breaking the four-week bullish trend

Technical Analysis

EUR/USD muted after Draghi's comments

“Longer term we still have major concerns over China but for the moment it backstops risk sentiment and that’s negative for the yen and euro.”

- Royal Bank of Canada (based on Bloomberg)

• Pair’s Outlook

  ECB President Draghi confirmed his readiness to act in March, which used to have an immediate bearish impact on the Euro vs Dollar. The pair slumped towards 1.1150, therefore closing the session almost 90 pips lower from the opening mark. The bears are aiming at the support cluster near 1.11, namely the monthly R2, weekly S1 and 20-day SMA. Success here should imply a sell-off down to the major 200-day SMA at 1.1053. This level will be expected to contain a decline for some period of time, given that daily technical indicators remain committed to the bullish scenario.

• Traders’ Sentiment

  The number of long positions in the SWFX market declined to 44% by Tuesday morning from 46% a day earlier. Meantime, pending orders remain slightly bearish with respect to the pair.

GBP/USD risks breaking the four-week bullish trend

“If there was a Brexit scenario, the market is considering the probability that could provide another headwind to growth in the UK and could result in lower rates from the Bank of England later this year.”

- Bank of Tokyo-Mitsubishi UFJ (based on Business Recorder)

• Pair’s Outlook

  The British currency started the week with a rather serious decline, but with the support line untested. Technical indicators are shifted from bullish to mixed signals in the daily timeframe, suggesting a possibility of a bearish reaction today exists. The up-trend is reinforced by the monthly PP, the weekly S1 and the 20-day SMA, thus, we should not see a more than 50-pip slump; unless inflation data disappoints dramatically. Meanwhile, the weekly PP is the closest resistance, but is unlikely to provide sufficient supply and limit the gains.

• Traders’ Sentiment

  Today 60% of all open positions are long, compared to 53%. At the same time, the number of purchase orders surged from 47 to 65%.

USD/JPY consolidates around 114.50

“The JPY was the victim of improved risk sentiment, its ‘safe haven’ appeal fading.”

- BNZ (based on WBP Online)

• Pair’s Outlook

  With demand for less riskier assets, namely the Yen, lower, the US Dollar was able to post significant gains against it on Monday. Daily and weekly technical studies keep insisting that the given pair is likely to resume its bearish momentum rather sooner than later. The monthly S2 and the weekly PP form the nearest support cluster just under 114.00, but if bears manage to push the USD/JPY lower, this level will doubtfully hold. At the same time, the closest area to stop USD-buying is located above the 117.00 major level, more than 200-pips away from the spot price.

• Traders’ Sentiment

  Although more traders (64%) have a positive outlook towards the Buck (previously 48%), the share of buy orders slid from 59 to 51%.

Gold continues to slide as markets grow

“The (precious metals) complex has benefited from the recent global risk-off attitude and heightened volatility. However, a pull-back was inevitable at some stage.”

- MKS Group (based on CNBC)

• Pair’s Outlook

  Yesterday markets were encouraged by dovish comments made by ECB President Draghi, while equities and many commodities rallied. Gold has therefore closed below the first target, namely monthly R3 at 1,209. Tuesday morning we are observing more selling pressure, which is pushing prices towards the October 2015 high at 1,191. By violating this initial daily support for today, the bullion will be in a good position to plummet down to the Feb 10 low at 1,181.50, followed by the bunch of demand levels between 1,170 and 1,165 (Aug 2015 high; monthly R2; 20-day SMA).

• Traders’ Sentiment

  Monday has seen a sharp plunge in the total number of long open positions in the SWFX market. The bullish share went down to 31% from 44%, which is the lowest level we have seen while analysing this commodity.

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