Gold to look at 1,205/1,188 dense support

Technical Analysis

EUR/USD prepares for gains, FOMC minutes loom

“We’d feel more confident in calling a top in the dollar if it had risen more to match prior cycles. The dollar’s uptrend has another year, or more, to go.”

- Standard Bank Group (based on Bloomberg)

• Pair’s Outlook

  Friday's wide trading resulted in no gains for both sides of the market. EUR/USD attempted to grow to 1.1440 and decline as low as 1.1340, but ultimately a small green candle confirmed that the pair added only 11 pips over the day to end it near 1.1389. Odds are biased in favour of the bulls this week, as the weekly R1 (1.15) along with the October 2015 peak are opened to testing. There are no intermediate resistances on the pair's way up. Moreover, the aggregate signal provided by daily technical indicators is positive for the Euro zone's currency.

• Traders’ Sentiment

  Only somewhat more than 41% of traders in the SWFX market estimate that the Euro is going to appreciate against the world's main reserve currency. As for future orders placed on this currency pair, more than 60% of them are going short on the Euro against the Dollar.

GBP/USD risks falling back under 1.42

“Yellen has pretty much decided the dollar's near-term direction, and with U.S. jobs data out of the way each currency will likely move on domestic factors versus the dollar.”

- Barclays (based on CNBC)

• Pair’s Outlook

  Last Friday the GBP/USD currency pair declined more than anticipated, having pierced the immediate support cluster and put the short-term up-trend to the test. The Cable is now expected to rebound from the mentioned support line, which is located on top of the 1.42 major level. However, the rally is likely to be short-lived, unless the Sterling manages to climb over a tough supply area around 1.4270, represented by the weekly and the monthly PPs, the 20 and the 55-day SMAs. On the other hand, in case the five-week up-trend fails to cause a rebound, the next target would then be the weekly S1 and the Bollinger band, both located around 1.4075.

• Traders’ Sentiment

  Market sentiment is strongly bullish, as 65% of all open positions are long (previously 59%). The share of buy orders surged from 43 to 55%.

USD/JPY to continue edging lower

“I think the market is too pessimistic today, against the dollar, I don't see any reason that many people would want to buy the yen against the dollar.”

- Masashi Murata, Brown Brothers Harriman (based on Reuters)

• Pair’s Outlook

  The USD/JPY retained its weakness after Yellen’s dovish stance last week, which resulted in the pair’s 90-pip slump on Friday. The Buck is still subject to a possible decline today, but with the immediate support, namely the Bollinger band, the weekly and the monthly s1s, most likely limiting the losses around 111.00 psychological level. Technical indicators keep giving mixed signals in the daily timeframe, suggesting a possibility of the Greenback retaking the 112.00 major level exists, whereas the closest resistance area rests only circa 112.50 in face of the 20-day SMA, the weekly and the monthly PPs. The base case scenario is a drop closer towards the down-trend below 111.00.

• Traders’ Sentiment

  Nearly three quarters (74%) of all open positions are now long (previously 73%), while the number of sell orders slid from 64 to 62%.

Gold to look at 1,205/1,188 dense support

“Gold didn’t like the data […]. It may have encouraged some people to take profits on gains from the first quarter.”

- LOGIC Advisors (based on Wall Street Journal)

• Pair’s Outlook

  Technical trading of the bullion remains uncertain at the moment, because there are several important resistances and supports surrounding the present spot price of 1,217. From the upside, the weekly pivot point at 1,224 is the most immediate supply, followed by the 23.6% Fibonacci retracement of the Dec-Mar uptrend and the 20-day SMA at 1,227/30. Still, we suspect that the market will attempt to push gold prices lower in the near-term. However, XAU/USD will inevitably hit a tough cluster of demand levels and the first support is going to be placed at 1,205 (weekly S1; 55-day SMA).

• Traders’ Sentiment

  With value losses, several short traders have initiated some profit taking in the SWFX market. It decreased the overall share of the bears down to 53% by Monday morning from 59% three days ago.

 

 

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