EUR/USD lunges at 200-day SMA

Technical Analysis

EUR/USD lunges at 200-day SMA

“The contagion of a ‘Brexit’ is spilling over to a full blown existential crisis for the eurozone: if Britain can renegotiate its status, why not anyone else?”

- Christopher Vecchio, DailyFX (based on MarketWatch)

• Pair’s Outlook

  The Euro rebounded after it touched upon the formidable 1.0970/50 demand area. However, the 200-day SMA remains intact, and it still might not let the rate to exit this week’s range. In case of a close above 1.1050, the rally will have a good chance of extending up to 1.1115, namely the monthly R2 level. In the longer-term perspective, EUR/USD is expected to recover to 1.14 dollars, which is the current level of the upper bound of the ascending channel.

• Traders’ Sentiment

  The difference between the amounts of long and short positions is negligible—merely 2 percentage points, meaning the sentiment is neutral. As for the orders, the portion of commands to sell the single currency inched higher from 54 to 62%.

GBP/USD in limbo ahead of US GDP

“The biggest move for the week is sterling on Brexit worries and it will stay in the spotlight for the first half of the year leading up to the referendum.”

- State Street (based on CNBC)

• Pair’s Outlook

  The Cable’s volatility was contained by the 1.39 level from the downside and the 1.40 level from the upside, as the pair reacted on fundamental data. The Sterling managed to climb over the immediate resistance, which is now providing rather strong support around 1.3930. Although we could se a rally beyond 1.4050, with the closest resistance located at 1.4091, risks of falling back and under the 1.39 mark persist. Near-term technical studies are unable to give any clear sense of direction, but the weekly and the monthly ones retain their bearish signals.

• Traders’ Sentiment

  Today 63% of traders hold long positions (previously 65%). Meanwhile, the number of buy orders takes up 55% of the market.

USD/JPY in tight range between 112.00 and 113.00

“Overall, a constructive message from the G20 could support an already ongoing recovery in risk sentiment, but ultimately the ability of global growth data to improve will be more important.”

- BNP Paribas (based on Reuters)

• Pair’s Outlook

  The American Dollar succeeded in outperforming the Yen yesterday, amid strong readings of US fundamental data. Even though the day ended with a USD/JPY rally, none significant level was breached. Through all of the week the pair maintained trade between the cluster at 117.70 providing support and the weekly PP at 113.24 acting as a resistance. With technical studies retaining distinctly bearish signals, the Greenback is expected to decline and remain within the borders of the mentioned levels. However, a positive surprise in fundamentals could trigger a rally towards 114.00.

• Traders’ Sentiment

  Market sentiment is strongly bullish, as 73% of all open positions are long. The portion of buy orders remains unchanged at 51%.

Gold to stay above 1,220

“The general economic situation is giving support to the gold market.”

- a bullion trader in Hong Kong (based on CNBC)

• Pair’s Outlook

  Gold is gaining more and more ground. Although two days ago the commodity failed to gain a foothold above 1,250 dollars, the outlook remains bullish, even though the monthly indicators are mostly giving ‘sell’ signals. The near-term sell-offs should be limited by the recently established up-trend and the weekly pivot point at 1,220/19, while the February maximum is the closest significant resistance. Beyond 1,264, the price should set its eyes on 1,307, the highest trading point of 2015.

• Traders’ Sentiment

  A little less than three fourths of the SWFX market participants are pessimistic with respect to the precious metal. At the moment, 73% of open positions are short, which is 1 pp lower than the reading recorded 24 hours ago.

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