EUR/USD set to decline to 1.37

Technical Analysis

EUR/USD set to decline to 1.37

“One of the things we noticed was continued deterioration in Ukraine, which the market hasn’t really fully priced in.”

- Bank of New York Mellon (based on Bloomberg)

• Pair’s Outlook

  At the moment EUR/USD is testing the support at 1.3816/15 represented by the monthly and weekly pivot points. If this level is breached, the next significant concentration of demand is expected to be at 1.3787—20 and 55-day SMAs. However, there is still a high chance of further depreciation of the Euro. The sell-off is likely to persist as long as the currency pair is above the up-trend support line at 1.37, which in turn is reinforced by the 100-day SMA.

• Traders’ Sentiment

  While the distribution between the long (35%) and short (65%) positions is more or less the same as yesterday, there was a notable increase in the sell orders placed on EUR/USD 100 pips from the spot, specifically from 55% up to 61%.

GBP/USD stands still above 1.67

“I think we've already seen the top against the dollar.”

- Oliver Harvey, Deutsche Bank (based on Reuters)

• Pair’s Outlook

  Similarly to EUR/USD, the Cable is also standing motionless above its weekly PP. According to the daily and monthly technical indicators, however, the Sterling should be headed north, towards the February peak at 1.6822. This level is needed to be broken in order for the medium-term outlook to become bullish. Meanwhile, the price may cede ground and retreat back to the upward-sloping trend-line, which merges with the 100-day SMA at 1.66.

• Traders’ Sentiment

  The percentage of traders believing the Pound is going to lose value has not changed during the last 24 hours—it is 58%. At the same time, the share of commands to purchase the currency is also largely the same—70%.

USD/JPY challenges 102.34/03

“The government in Japan is trying to build the case for another wave of stimulus.”

- Bank of New York Mellon (based on Bloomberg)

• Pair’s Outlook

  Although initially USD/JPY appeared hesitant in the face of the down-trend resistance line, it has nevertheless launched an attack on 102.34/03. If this attempt succeeds, we will be looking at 102.94/72 (monthly PP and 100-day SMA) as the next target. And while the near-term technical indicators are not in favour of such a course of events, most of the monthly signals suggest to acquire the U.S. Dollar against the Yen.

• Traders’ Sentiment

  The sentiment towards USD/JPY remains explicitly bullish, being that right now as many as 72% of open positions are long. In the meantime, the buy orders are losing their positions—50 pips from the spot their portion plunged from 59% down to 39%.

USD/CHF halted by 0.8813/12

“The dollar is not reflecting fully the CPI data because of the fear in the market regarding Ukraine and the more mixed U.S. data that we have seen.”

- Societe Generale (based on CNBC)

• Pair’s Outlook

  As suspected, the resistance at 0.8813/12, consisting of the weekly and monthly pivot points, managed to negate the bullish momentum of USD/CHF. Now the currency pair is likely to move in accordance with the weekly and monthly indicators that are mostly pointing south. There it should encounter the support at 0.8744/28 and eventually approach the 2011 lows at 0.86, where it will also meet the falling trend-line.

• Traders’ Sentiment

  There has been no deviation yet in the relative numbers of bullish (72%) and bearish (28%) market participants. However, there are substantial changes in the orders. The share of buy ones 100 pips around the current price plunged from 65% to 46%.