EUR/USD returns to monthly PP

Technical Analysis

EUR/USD returns to monthly PP

“If EURUSD continues to hover around 1.40 and the Fed sticks to its current message then the ECB may have to unleash the big guns in the form of negative deposit rates, or QE, to weaken the EUR once and for all.”

- Forex.com (based on MarketWatch)

• Pair’s Outlook

  Yesterday’s attempt of EUR/USD to decouple from the monthly PP at 1.3815 failed, as the currency pair did not manage to reach the down-trend resistance line at 1.39. Meanwhile, most of the technical indicators on the nearest time-frames are bullish, suggesting it may still try to recover. However, in the long run the Euro is expected to weaken, and the chances of it rising up to the 2011 highs are rather low.

• Traders’ Sentiment

  SWFX traders are again building up short positions on EUR/USD—their share increased from 65% up to 67.5%. Additionally, the percentage of orders set to sell the common currency also went up, from 60% to 65%.

GBP/USD stopped by Feb high

“The pound's uptrend is intact.”

- Investec (based on Reuters)

• Pair’s Outlook

  For now the latest up-move did not result in a breach of an important resistance zone at 1.6844/14. And even though majority of the forecasts imply depreciation of the Sterling in the coming months (to 1.64 in Q2 and 1.63 in Q3), we still cannot rule out a rally up to the 2009 highs at 1.70. An advancement far beyond that point, in the meantime, is highly unlikely, in part due to presence of a rising trend-line at 1.71.

• Traders’ Sentiment

  While yesterday the sentiment towards GBP/USD was moderately negative—60% of open positions were short, today bearish views are even more popular—71% of the SWFX market participants expect the Pound to cede ground.

USD/JPY continues to recover

“The short term upside risks for the broad USD view remain intact.”

- JPMorgan (based on Bloomberg)

• Pair’s Outlook

  Although initially the bullish momentum of USD/JPY faltered after an encounter with the down-trend resistance line, the upward direction was preserved. Now the currency pair is about to test another significant supply area at 102.91/72, consisting of the monthly PP and 100-day SMA. If this area is overcome, the next objective will be the Apr high and monthly R1 just above the level of 104, as the long-term outlook is positive.

• Traders’ Sentiment

  There are slight fluctuations, but the bulls carry on dominating the USD/JPY market by taking 70% of it at the moment. As for the orders, 57% of them are to acquire and 43% are to sell the buck against the Yen.

USD/CHF steps over monthly PP

“There are signs of a pick-up in the U.S. economy markets have been long waiting for.”

- Barclays (based on CNBC)

• Pair’s Outlook

  At the beginning USD/CHF was declining because of a tough resistance level represented by the monthly PP. But a series of strong fundamental news on the U.S. economy yesterday turned the pair around, resulting in a breach of 0.8813 and subsequently a test of the 55-day SMA. Unless 0.8838/31 stops the increased demand for the greenback, we could soon witness a test of the falling trend-line at 0.8881.

• Traders’ Sentiment

  In terms of positions, the situation in USD/CHF is similar to the one observed in USD/JPY, namely preponderance of longs (71%). The distribution between the buy and sell orders, on the other hand, is quite different—35% and 65% respectively.