GBP/USD backed up by 1.66

Technical Analysis

EUR/USD challenges 1.3958/23

“The euro continues to ride on the momentum generated by ECB's Draghi. Recent economic indicators from the euro zone have been upbeat as a whole, decreasing expectations for further easing.”

- Sumitomo Mitsui Trust (based on CNBC)

• Pair’s Outlook

  At it turned out, EUR/USD was not required to come back to a cluster of supports at 1.38 in order to resume the rally. At the moment the currency pair is eroding the monthly R1. If it succeeds at breaching this resistance at 1.3958/23, the next target will most likely be the monthly R2 level at 1.4047, even though on the daily and weekly charts the technical indicators are mixed.

• Traders’ Sentiment

  SWFX market participants are not getting discouraged by Euro’s appreciation. Most of them remain convinced that eventually the single currency will depreciate, as 66% of open positions are short. Concerning the orders, there are now more buy ones 100 pips from the spot, namely 63%.

GBP/USD backed up by 1.66

“The risk of further appreciation is asymmetric and skewed to the downside. Optimism has led to investors being extremely overweight sterling. And we’re now getting to the point where it’s unsustainable.”

- Bank of America (based on Bloomberg)

• Pair’s Outlook

  While being underpinned by a strong support area around 1.66 (monthly PP, up-trend 55-day SMA), the Cable seems to be inclined to rise. Presently the currency pair is testing the resistance at 1.6675/52 and in case the Sterling extends the gains, the weekly PP at 1.6719 is going to come under pressure next. In the long run, however, we still expect the British Pound to underperform.

• Traders’ Sentiment

  Even though the gap between the bullish and bearish market participants widened, it still remains rather small. At the moment of writing 44% of positions were long and 56% were short. As for the orders, the difference between the buy (49%) and sell (51%) ones declined.

USD/JPY slides beneath 102.78/71

“It seems that the yen is one beneficiary of a more nervous world.”

- Westpac Banking (based on Bloomberg)

• Pair’s Outlook

  Although at first it appeared that USD/JPY will find support at 102.78/71, right now it is on the verge of violating this important demand zone. The U.S. Dollar will then have few reasons to turn around before it reaches the 38.2% Fibo of the October-December bullish run, despite the daily and monthly technical studies largely pointing to the upside.

• Traders’ Sentiment

  An overwhelming majority (74%) of the traders believe that the buck is going to regain its bullishness and increase in value relative to the Japanese Yen. Meanwhile, the percentage of buy orders placed on USD/JPY is falling. While yesterday 71% of market participants were willing to purchase the U.S. Dollar, today—only 67%.

USD/CHF stays bearish

“If there's any dominant theme, it's one of 'risk-off' given the concern over the slowdown in China and its financial problems.”

- HSBC (based on Reuters)

• Pair’s Outlook

  USD/CHF continues to cede ground. The currency pair has already fallen down to the weekly S1 and may still take a few steps downstairs. Nevertheless, near 0.87 (monthly S1, down-trend) the greenback should bottom out and commence a robust recovery. Potentially this could lead to a break-out to the upside from the one-year falling wedge.

• Traders’ Sentiment

  More and more traders consider the dip in USD/CHF to be overstretched. Accordingly, the share of long positions grew from 72% up to 74%. At the same time, the demand for the buck is likely to increase even more in the future, as 79% of orders set on the pair are to acquire the U.S. Dollar against the Franc.