EUR/USD stands at weekly S1
“The EURUSD remains poised to weaken further over the near to medium term as the fundamental outlook for the euro area turns increasingly bleak.”
- DailyFX (based on MarketWatch)
Decline of the price has been halted by a support area at 1.3199/28, which could potentially initiate an upward correction up to 1.3322, a recently breached major trend-line. Accordingly, the long-term outlook has been changed to negative with the nearest target being located at 1.3079/43. However, weekly technical indicators continue giving “buy” signals.
The gap between the long and short positions has stabilised, as the former carry on taking up 45% of the market, while the share of the latter remains at 55%. On the other hand, dominance of buy orders (55%) over the sell ones (45%) has substantially diminished during the weekend.
GBP/USD closes gap
“I expect to see more reaction from the downgrade on sterling rather than on gilts. I don’t think it came as a total surprise to the market.”
- Shahid Ikram, Aviva Investors (based on Bloomberg)
At the moment the Cable is headed towards 1.5164 in order to fill the downside gap. Nevertheless, a close below a key support zone on Friday implies continuation of the sell-off afterwards. Even though the technical studies are either mixed or neutral, this is the most likely scenario. The first strong support will then be encountered at 1.4853.
Right now the British Pound is one of the most popular currencies, being bought in 67% of cases on average. In its pair with the U.S. Dollar the Sterling is preferred even more—72% of positions are long. The tendency is different with the pending orders, a majority of which (69%) are to sell the Pound.
USD/JPY soars from 93.52/14
“We are likely to see a more moderate and gradual fall in the yen from here. At the end of the day, whoever leads the BOJ, policy options the bank has are more or less the same.”
- a trader at a Japanese bank (based on Reuters)
USD/JPY starts the week with a more than 100 pips wide void to the upside, proving topicality of a rising support line at 93.52/14, which did not allow further development of a dip. Now it would be reasonable to assume that the pair will slip, but should soon regain bullish impetus and challenge a dense resistance area at 95.33/94.93 that separates the spot price from a bullish trend-line at 96.19.
Conviction of market participants that USD/JPY will be able to keep up climbing higher has been notably damaged, as the portion of bulls has fallen to 59%. As for the orders placed on the currency pair, most of them (72%) are to acquire the greenback against the Japanese Yen.
USD/CHF stays at 0.9307/0.9294
“We think it's a bit early to be too early to be too worried about the end of QE.”
- BNP Paribas (based on CNBC)
It appears that a falling trend-line at 0.9307/0.9294 has fully negated the upward momentum. Consequently, we should expect USD/CHF to focus on supports, the closest of which is situated at 0.9273/62. A subsequent level at 0.9215/01 is likely to be significantly tougher, being formed by the weekly S1 and two SMAs, namely for the last 20 and 55 days.
SWFX traders’ sentiment towards USD/CHF has become less bullish, as the share of long positions has declined to 64%, while the Swiss Franc is one of the least frequently acquired among the majors. The distribution between the buy and sell orders is 51% to 49% respectively.