GBP/USD faces 23.6% Fibo

Technical Analysis

EUR/USD to break 1.29

“There’s still a bit of uncertainty about what the Fed could be releasing. The trend is for the U.S. dollar to keep strengthening, because even if the Fed doesn’t signal it now, they’re still talking about an exit strategy and they’re looking at raising rates at some point.”

- St. George Bank (based on Bloomberg)

• Pair’s Outlook

  EUR/USD seems to have formed a rising wedge pattern, which further implies depreciation of the European currency, along with the daily and weekly technical studies. However, in order to confirm its bearish intentions, the pair has to defeat the support at 1.29, represented by the monthly S2 and weekly S1, while at the same time stay beneath the resistance at 1.31. This will in turn expose the 2013 low at 1.2750.

• Traders’ Sentiment

  The difference between the long and short positions is slowly but surely coming to naught, as it declined from 18 percentage points five days ago to 12 today. Meanwhile, the share of sell orders fell from 67 to 58%.

GBP/USD faces 23.6% Fibo

“Traders are reluctant to buy or sell the dollar until they see the FOMC outcome. The market is on guard as there is no consensus view on how the statement will change.”

- Sumitomo Mitsui Banking Corp. (based on Bloomberg)

• Pair’s Outlook

  Although it looked as if the market respected the new resistance at 1.6250, the supply here turned out to be insufficient to push the Pound back to the monthly S3 at 1.61. As a result, GBP/USD is now challenging the 23.6% retracement of the July-August sell-off, but in the end it should fail to advance far beyond 1.63, as suggested by the near-term technical indicators, and instead return to this year’s low at 1.6050.

• Traders’ Sentiment

  Just as in EUR/USD, the bullish views are getting less and less popular, being that the portion of longs is now 59% (61% yesterday). As for the orders, the distribution between the buy and sell ones is 43 and 57% respectively.

USD/JPY successfully weathers selling pressure

“With public pensions working toward rebalancing their domestic bond-heavy portfolios, private pensions are highly likely to take the same approach. Hedge funds are betting the changes are already taking place, which is increasing pressure for yen selling as they race to keep up.”

- Nomura (based on Bloomberg)

• Pair’s Outlook

  Although there was expected a distinct bearish correction at least down to 106 (we should still not rule it out completely), the U.S. Dollar is holding fairly well during the current profit-taking. Accordingly, while the up-trend support line stays intact, the long-term bias towards USD/JPY will remain bullish, with the initial target being the monthly R3 at 108 and the next potential objective being the 2008 Sep high at 109.

• Traders’ Sentiment

  Most of the SWFX market participants consider the Greenback to be overvalued relative to the Japanese Yen, since as many as 69% of open positions are short. Concerning the pending orders, still 62% of them are set to purchase the Buck.

USD/CHF is kept from falling by 0.93

“We're prepared for a sustainable bull market in the dollar, probably starting later in Q4. The goal here is to buy the dollar in dips.”

- Credit Agricole (based on CNBC)

• Pair’s Outlook

  USD/CHF is presently well-supported by the monthly R2 at 0.93, meaning there is a high chance the bulls are eventually going to emerge victorious and make the Greenback surpass the recent highs. However, it may take a lot of time for them to erode the resistance above 0.94 due to its density. But this will most likely open a path towards the last year’s high at 0.98, despite a half of the monthly indicators pointing South.

• Traders’ Sentiment

  The traders start perceiving the U.S. Dollar as more attractive—the percentage of long positions in the market went from 54 to 56%. At the same time, the advantage of buy orders (62%) over the sell ones (38%) widened.