EUR/USD Forecast: Negative sentiment persists, but bottom nearby
|The EUR/USD pair managed to recover some ground this past week, but not before putting on a fresh 7-month low of 1.0850. The pair is poised to close the week below 1.0950, as the common currency found some strength following the release of the Michigan consumer sentiment survey that fell to 87.2, missing expectations of an uptick to 88.1, and in spite of strong US Q3 GDP figures. The EUR's recovery seems to be more due to profit taking ahead of the critical 1.0800 level, than self strength, as with a few short-lived exceptions, the EUR/USD pair has been trading above the level ever since January 2015.
Next week, the first of the month, will bring loads of critical data, including RBA, BOJ, FOMC and BOE's meeting, European GDP and the US Nonfarm Payroll report, probably the main reason of the poor performance of the pair these last few days.
From a technical point of view, the pair is still bearish, given that the recovery has stalled at the 23.6% retracement of its latest bearish move, from 1.1278 to 1.0850. Chances of a break lower, will depend mostly on the FED, and the tone of Yellen's wording in regards of an upcoming rate hike. Anyway, a recovery above the mentioned Fibonacci level, at 1.0950, should see the corrective movement extending up to 1.1010, the 38.2% retracement of the same slide. Further gains beyond this last would confirm the interim bottom and see the pair advancing up to 1.1120.
Below 1.0850 on the other hand, the pair will probably extend its slide pass 1.0800, targeting then 1.0710, this year low posted early January.
EUR/USD still seen falling, but not too far away
The Forecast poll make by FXStreet shows that this week, bears are an increasing majority in the EUR/USD, up to 67% from past week´s 53%, although the pair is hardly seen breaking below 1.0800. The negative sentiment eases in a one-month view, with the pair seen correcting modestly higher, but not beyond 1.1200. In the longer run, however sentiment flipped from neutral to clearly bearish, with the pair still seen holding around the critical 1.0800 region.
USD/JPY increasingly bullish sentiment, with 110.00 seen as possible towards year-end
The USD/JPY pair, once again, has moved beyond market's expectations, as sentiment for this week is strongly bullish, although the average target is below current levels. The outlook, however, changes to neutral in the longer ride, with bulls and bears well-split. Overall, this means uncertainty leads, particularly these days, with both Central Banks' meetings around the corner. Hopefully next Friday the picture will be much more clearer.
GBP/USD: Pound weakness to persists, although 1.2000 still seen holding
As for the Pound, seems latest positive data has somehow dilute hopes for a break below 1.2000. Despite bears are over 70% in the short term, the pair is seen recovering from then on, particularly by banks that eye an advance towards 1.3000 by the end of November. Traders however, remain bearish, although those looking for targets below 1.2000 are a minority.
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