EUR/USD breaches 55-day SMA

Technical Analysis

EUR/USD breaches 55-day SMA

“EUR/USD may continue to give back the rebound from earlier this month should the central bank head look to implement more non-standard measures ahead of the second-half of 2014.”

- DailyFX (based on CNBC)

• Pair’s Outlook

  Despite a plethora of ‘buy’ signals provided by the technical indicators on all relevant time-frames, the 55-day SMA failed to remain intact. This fact jeopardises the short-term bullish outlook we were inclined to believe in yesterday. Now the currency pair is rather in a position to move towards the key support at 1.37 (100-day SMA and up-trend line) than to head en route to the key resistance at 1.39 (down-trend line).

• Traders’ Sentiment

  The sentiment towards EUR/USD slightly improved, but a majority of the market participants are still expecting the single currency to underperform, namely 64% of them. In the meantime, the share of sell orders grew from 54% up to 56%.

GBP/USD stays capped by 1.6822/14

“Markets are now aggressively pricing in an early BoE rate hike. We are now looking at January or February 2015 for a hike. This data is likely to continue lending support and a push towards $1.70 is now on the cards.”

- UKForex (based on Reuters)

• Pair’s Outlook

  While EUR/USD is already on the move, the Cable still stays inactive. After several unsuccessful attempts to surpass the resistance represented by the Feb high, the currency pair seems to have lost its upward momentum and now simply gravitates towards 1.6822/14. However, a substantial majority of the technical studies suggest that GBP/USD retains the bullish potential and thus remains a threat to the nearby resistances.

• Traders’ Sentiment

  Although there is no movement observed in GBP/USD, the traders are becoming less sure that the Sterling is able to appreciate. Presently three out of four positions are short. At the same time the gap between the buy (45%) and sell (55%) orders is narrowing.

USD/JPY’s rally halted by monthly PP

“Japan’s swing from a trade surplus country to a deficit is one of the important shifts in the world economy in recent years.”

- Brown Brothers Harriman (based on MarketWatch)

• Pair’s Outlook

  Monthly pivot point at 102.72 turned out to be tough and unwilling to let the U.S. Dollar to advance further. Accordingly, we are likely to witness a bearish correction, which should be stopped either by the 55-day SMA at 102.38 or a combination of the weekly PP and 38.2% Fibo at 102.19. Otherwise the dip may extend down to the falling support line at 101.77/69, where it is reinforced by the weekly and monthly S1 levels.

• Traders’ Sentiment

  Current decline is apparently discouraging some of the traders; as compared to the yesterday’s readings, the share of long positions fell from 75% to 72%. Concerning the buy and sell commands placed, their numbers are completely identical at the moment.

USD/CHF closes in on down-trend

“There’s been some dollar buying on the back of strong U.S. economic numbers. We’re in a period where the market is paying close attention to U.S. macroeconomic factors. Data will be the focus this week.”

- Sumitomo Mitsui Trust Bank (based on Bloomberg)

• Pair’s Outlook

  USD/CHF continues to disregard the bearish technical indicators and it is now about to re-test the downward-sloping trend-line at 0.8857. If this resistance is broken, there will be a good possibility for the pair to form a double bottom pattern, with a neck-line near the monthly R1. Conversely, if the buying pressure is not strong enough, the greenback will stay within the boundaries of the falling wedge pattern and most likely will then slide to 0.86.

• Traders’ Sentiment

  An overwhelming majority of the SWFX market participants consider the U.S. Dollar to be undervalued relative to the Swiss Franc. Right now 72% of traders are long the buck, while merely 28% of them believe the currency is going to fall in price even more.