GBP/USD attempts to prolong rally

Technical Analysis

EUR/USD faces tighter trading ranges

“Although the downside risks have diminished since earlier in the year, I still judge the balance of risks to my inflation and growth outlooks to be tilted slightly to the downside.”

- New York Fed President William Dudley (based on Reuters)

• Pair’s Outlook

  EUR/USD was consolidating in a very narrow range last week, which makes the technical setup neutral for the upcoming working week. Weekly pivot points are placed much closer to each other, meaning now the major 1.15 resistance (October 2015 high) is safeguarded by the weekly R1 at 1.1457. The weekly S1 is in turn located at 1.1329, followed by the 20-day SMA at about 1.1294. A break-out from any of these zones should raise volatility. Meanwhile, both daily and weekly aggregate technical studies suspect the break-out will happen in the upward direction.

• Traders’ Sentiment

  For a third consecutive working day the total percentage of bullish SWFX positions is flat at just 39%. Pending orders are also bearish in both short and long ranges from the spot.

GBP/USD attempts to prolong rally

“Even without the ‘Brexit’ headwinds, pound-dollar would have traded lower this year based on this inflation divergence. Markets are looking for any reason to sell the pound, while there’s limited buying appetite given the ‘Brexit’ event risk.”

- ING Groep NV (based on Bloomberg)

• Pair’s Outlook

  Last Friday the GBP/USD currency pair managed to regain the bullish momentum and retake the 1.41 major level, also erasing Thursday’s losses completely. The Cable still has room for a rally towards the 1.43 psychological level today, which is bolstered by a number of other important levels, namely the monthly PP, the weekly R1, the 20 and the 55-day SMAs. Nevertheless, there is another obstacle at 1.4151, represented by the weekly PP, which could also contribute to keeping the pair from appreciating. According to technical indicators, the Sterling is to continue declining versus the Buck, with the nearest support located just under the 1.40 mark.

• Traders’ Sentiment

  Market sentiment remains strongly bullish, as 66% of all open positions are long. Meanwhile, 65% of all pending orders are to buy the Pound.

USD/JPY remains on the back foot

“Specifically in regards to weakening the JPY we believe that the BoJ lacks real tools to effectively weaken the JPY for extended period of time. Ineffective direct FX intervention will only further damage the central banks reputation.”

- Swissquote Bank (based on WBP Online)

• Pair’s Outlook

  The US Dollar was unable to maintain trade above the 109.00 major level on Friday, ultimately retreating and closing with a 15-pip loss. The same resistance is likely to keep the USD/JPY pair from advancing today as well, namely the monthly S2 at 108.70, whereas the Bollinger band around 108.08 is providing immediate resistance. However, the chance of the nearest resistance getting pierced is relatively high, as the Greenback is support by a fresh 18-month low of 107.63. A breach of this level could trigger a sell-off, leading the exchange rate towards the monthly S3 and the weekly S1 at 106.60. Meanwhile, technical indicators are unable to confirm either scenario.

• Traders’ Sentiment

  Today 72% of traders hold long positions (previously 74%), while the portion of sell orders edged higher from 49 to 54%.

Gold breaks out of bearish channel

“Markets are still jittery about what’s going on in the global economy… and gold is the preferred safe-haven.”

- OCBC Bank (based on Financial Express)

• Pair’s Outlook

  It seems that the 55-day SMA (1,216.61) is finally starting to have a greater influence on the bullion. Without touching this line, XAU/USD decided to start a confident recovery on Monday morning after the previous week of indecisiveness. Gold is soaring through both the monthly pivot point (1,241.50) and the weekly R1 at 1,250. Consolidation above the latter level, which also is the highest since March 23, will pave the way for a rally towards 1,260 (weekly R2, Bollinger band, February high). Bullish chances are boosted by the fact that the metal has broken out of the two-month channel down pattern.

• Traders’ Sentiment

  Over the past weekend the percentage of the bulls has dipped to 37% from 51%, the lowest mark in 13 days. The market has thereby reestablished the majority status for the bears.

 

 

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