USD/JPY plunges from 102.11

Technical Analysis

EUR/USD recovers

“So far, Fed members this week have sounded more dovish and created some uncertainty in the market heading into the minutes.”

- IG (based on Bloomberg)

• Pair’s Outlook

  The Euro is currently undergoing a correction after a July decline. This rally should be stopped at 1.3641/16, where the monthly pivot point merges with the 55-day SMA. Additional resistances are at 1.3695/81 and 1.3721 represented by the 200 and 100-day SMAs respectively. Still, it is more likely for the pair to preserve an overall bearish momentum and eventually hit this year’s low at 1.3475, following a breach of the monthly S1.

• Traders’ Sentiment

  The gap between the numbers of bullish and bearish traders stays minimal—only eight percentage points, meaning the sentiment is neutral. As for the orders, 50 pips from the spot the sell ones are in a majority with 65% of the total amount.

GBP/USD trades sideways

“Coming into the autumn period we will increasingly look for action from the BoE, meaning that future BoE meetings will be anything other than a “non event.”

- Commerzbank (based on Reuters)

• Pair’s Outlook

  Regardless of the bullish outlook implied by the technical studies, the Cable remains flat, trading some 100 pips north from 2009 high. Nevertheless, the risks are heavily skewed to the upside—the closest resistance is at 1.7248/07 (monthly R1), but the Sterling has all the chances to reach 1.74 (monthly R2 and 16-month up-trend). In the meantime, high concentration of demand is supposed to be at 1.7069/44.

• Traders’ Sentiment

  The bears have further enhanced their advantage over the bulls. The former now take up 74% of the market (71% yesterday). As for the orders placed on GBP/USD, there is presently no significant difference between the buy and sell ones.

USD/JPY plunges from 102.11

“If it goes through 100.76, then I think it [USD/JPY] pretty quickly tests 100, and they [the BOJ] certainly don’t want to get below 100 in dollar-yen.”

- Robert Sinche, Stamford (based on Bloomberg)

• Pair’s Outlook

  In order to reinstate itself as a bullish pair USD/JPY had to close above the up-trend and 100-day SMA. Since this was not the case and 102.11 was confirmed as a new resistance level, there are good reasons to suspect that 101.27/20 could soon be breached. Then we will be looking at 100.84/76 as the next target. On the other hand, the monthly technical indicators are mostly pointing upwards, suggesting not everything is lost for the bulls.

• Traders’ Sentiment

  The share of long positions stands still at 73%, implying the market is strongly convinced that the greenback is going to appreciate relative to the Japanese Yen. A similar situation is with the orders 50 pips from the spot—71% are to buy and 29% are to sell the buck.

USD/CHF returns to 200-day SMA

“The dollar is sensitive to U.S. interest rates and U.S interest rates are lower now than they were after we got the jobs data.”

- Brown Brothers Harriman (based on CNBC)

• Pair’s Outlook

  Although there still seems to be a chance of the 200-day SMA acting as the support, the daily indicators suddenly turned heavily bearish. If this is true and the price falls, there is also a tough demand area at 0.8886/73, which has proven its strength on the first day of July. Should these levels both be broken, there will be a high probability of the U.S. Dollar subsequently falling through the monthly pivots towards the 2014 low at 0.87.

• Traders’ Sentiment

  Right now three out of four market participants are holding bullish views with respect to USD/JPY—75% of open positions are long and merely 25% are short. Yesterday the percentage of proponents of a rally was slightly lower—73%.