USD/JPY plummets to 102

Technical Analysis

EUR/USD extends rally to monthly PP

“The higher the euro, the higher the risk of perhaps more easing action in the not-too-distant future. The focus on the exchange rate has likely put a cap on euro strength at $1.40.”

- TD Securities (based on MarketWatch)

• Pair’s Outlook

  The 55-day SMA failed to contain bullishness of the common currency yesterday. As a result, EUR/USD is now testing the monthly pivot point at 1.3815, which guards the main resistance area near 1.39. The latter level is considered to be a ceiling for the currency pair, meaning that even if the Euro appreciates in the short term, there are substantial downside risks in the longer term regardless of the signals given by the weekly and monthly technical indicators.

• Traders’ Sentiment

  As the single European currency increased in value even more, the bears added another four percentage points and now take up as much as 64% of the market, which is already slightly above the 10- day average of 62%.

GBP/USD skyrockets

“I expect the pound still has momentum against the dollar, especially if you take into account the weaker than expected US payroll numbers out last week.”

- Torben Kaaber, Saxo Capital Markets (based on Reuters)

• Pair’s Outlook

  None of the nearby resistances proved to be strong enough to prevent GBP/USD from soaring yesterday. Both the 55-day SMA and monthly PP were effortlessly pierced through, leaving a nine-month up-trend open to attack. And while for now the bias remains bearish, because this resistance is still intact, a breach of this level could entail further appreciation of the British Pound, potentially up to the 2009 highs at 1.70.

• Traders’ Sentiment

  Although both GBP and EUR appear to be in demand, the tendencies in the sentiments are quite different. In the first case the bears are enhancing their dominance, in the second, the gap is narrowing, as long positions are getting more popular (from 36% to 40%).

USD/JPY plummets to 102

“The burning question on everyone's mind today is whether dollar-yen will continue to head lower.”

- BK Asset Management (based on CNBC)

• Pair’s Outlook

  Stabilisation of USD/JPY near 102.72/66, as was expected yesterday, did not turn out to be the case. Instead, the exchange rate fell more than 100 pips and found support only near the 38.2% retracement of the November-December rally. But the key demand area is lower, around the level of 101, where the 50% retracement merges with the 200-day SMA, and until it is violated the outlook will stay bullish.

• Traders’ Sentiment

  Despite a precipitous decline in USD/JPY, the distribution between the long and short positions is exactly the same as 24 hours ago, when 71% of traders expected the U.S. Dollar to outperform the Japanese Yen. Meanwhile, the share of buy orders declined, from 74% down to 69%.

USD/CHF stays short-run bearish

“There’s a broadly weaker U.S. dollar bias, but not necessarily tied to one specific event or condition.”

- HSBC (based on Bloomberg)

• Pair’s Outlook

  After the resistance at 0.8929/22 triggered a massive sell-off, USD/CHF has already broken a series of important levels, including the 55-day SMA. Now the pair is testing the weekly S1 at 0.8836, but is highly likely to go deeper, as the support is not considered to be sufficiently tough to halt current downward momentum. The monthly PP at 0.8813, on the other hand, has a higher chance of limiting the losses and may thus initiate a rebound.

• Traders’ Sentiment

  Some of the SWFX market participants reduced their exposure towards the greenback, as it continues to cede ground relative to the Franc. The percentage of long positions open on USD/CHF slid from 74% to 70%.