GBP/USD rebounds from 1.7042

Technical Analysis

EUR/USD tests two-year up-trend

“She [Janet Yellen] seems to be tempering expectations somewhat and we very quickly turned to risk-off, which seems to be suiting the dollar.”

- Interactive Brokers (based on Bloomberg)

• Pair’s Outlook

  As suspected, EUR/USD failed to cross the resistance represented by the monthly PP, down-trend and 55-day SMA. As a result, the currency pair is now testing the support at 1.3568/54, created by the monthly S1 and two-year rising line. Despite the demand here, the sell-off may continue, but should have trouble pushing the price beneath 1.35, which has proven to be a reliable level in the past (in February and June).

• Traders’ Sentiment

  The sentiment towards EUR/USD remains neutral, as the difference between the shares of bullish and bearish market participants is currently negligible—only four percentage points (10 percentage points yesterday).

GBP/USD rebounds from 1.7042

“There is truly no evidence that Yellen’s Fed will be tightening in any meaningful way, that she believes the economy is accelerating, or that the dollar should rally — yet today that is exactly what is happening.”

- Samson Capital Advisors (based on MarketWatch)

• Pair’s Outlook

  As soon as the price dropped down to the 2009 high, the bulls became active and subsequently pushed the Cable through some of the nearest resistances. Judging by the technical indicators, the rally is likely to persist both in the short and long terms. If the current tendency is preserved, the next strong supply area will be hit at 1.7248/46 (monthly R1), but there should be an up-move to 1.74 before any pronounced bearish correction.

• Traders’ Sentiment

  Just as yesterday and five days ago, the SWFX market seems to be strongly convinced that the British Pound is going to underperform—71% of traders have shorted the currency against the Buck.

USD/JPY extends rally

“The BOJ have essentially backed off the idea of quantitative easing for now but are sending some cautious signals on growth.”

- BNY Mellon (based on Reuters)

• Pair’s Outlook

  Although we were inclined to believe that the supply at 101.64/54 is going to stop the pair, the U.S. Dollar carries on strengthening relative to the Yen. USD/JPY should now probe the monthly PP and 55-day SMA at 101.84/78, which are in turn guarding the resistance at 102.08/02 (down-trend and 100-day SMA). A close above the latter point will most likely imply a test of the 200-day SMA at 102.50.

• Traders’ Sentiment

  There is a significant advantage of long positions over the short ones at the moment, being that the former constitute 75% of the market and the latter—merely 25% of it. For now performance of USD/JPY meets the expectations.

USD/CHF soars from 200-day SMA

“The testimony does not change our Fed forecast, but it does support our view that there is a risk that the first rate hike may occur sooner than our June 2015 forecast if the labor market continues to improve faster than the committee expects.”

- Barclays (based on CNBC)

• Pair’s Outlook

  Although USD/CHF has been experiencing difficulties lately, in the end it managed to decouple from the monthly PP and 200-day SMA at 0.8928/16 and commence a recovery. Now, the only resistance separating the spot price and 0.90 is the monthly R1 at 0.8985/82. However, according to the technical indicators, appreciation of the Greenback against the Franc should not be sustainable—four studies are giving ‘sell’ signals on the monthly time-frame.

• Traders’ Sentiment

  There are no large changes in the sentiment—most of the traders are bullish, namely 72% of them. However, the percentage of the buy orders placed on USD/CHF has fallen noticeably since the previous report—from 66% to 52%.