EUR/USD surged most since Mar 20

Technical Analysis

EUR/USD surged most since Mar 20

“Markets today are all consistent with the high volatility theme in anticipation of Fed rate hikes, and still consistent with periodic healthy corrections in markets.”

- AMP Capital Investors Ltd. (based on Bloomberg)

• Pair’s Outlook

  Despite registering a major growth on Wednesday and crossing the important area at 1.1050 (April high, January low, weekly R2), the future outlook for EUR/USD is currently mostly neutral. Some bounce back can be observed in the short-term, following a 150-pip surge yesterday. Moreover, technical indicators are still pointing to the downside on weekly and monthly time frames, while the Stochastic suggests the pair became overbought this week.

• Traders’ Sentiment

  Distribution between long and short positions at the SWFX market remains biased in favour of the latter, as bulls are currently in the minority with only 44%. Pending orders to buy the Euro against the US Dollar in 100-pip range account for 48%.

GBP/USD reaches two-month high

“Lower oil prices are still likely to be a net positive for the [US] economy and we expect the strong gains in real disposable income and consumer confidence will underpin a Q2 recovery in consumption.”

- ANZ (based on WBP Online)

• Pair’s Outlook

  The Sterling almost fell in line with expectations, as it appreciated against the US Dollar yesterday. A hike towards the 200-day SMA took place, but the Cable still settled slightly lower. The resistance cluster around 1.54 failed to prevent the pair’s climb, as it stabilised at 1.5426. Technical studies suggest the Sterling will climb up again today; however, a fall might occur if the US fundamentals surprise with good figures. The 200-day SMA should stop the surge at 1.5490, while a slide back towards 1.53 is the worst-case scenario.

• Traders’ Sentiment

  Bulls slightly grew in numbers, as 44% of traders are now long the Pound, compared to 43% yesterday. The number of purchase orders, on the other hand, dropped from 51 to 47%.

USD/JPY to negate this week’s losses

“USD traded in a listless manner yesterday and there is no change to the current neutral outlook. Only a break out of the expected 118.30/120.10 consolidation range would indicate the start of a sustained mid-term move.”

- UOB Group (based on FX Street)

• Pair’s Outlook

  On Wednesday, the USD/JPY pair edged higher, despite bearish prospects and weak fundamental data. The Greenback experienced substantial volatility, before settling close to the 119 psychological level. Nonetheless, this obstacle was not overcome, but it is likely do so today. Immediate resistance retains its position around 119.20, although a hike towards the 20-day SMA at 119.42 is also possible. Meanwhile, technical indicators keep giving mixed signals.

• Traders’ Sentiment

  Bulls are prevailing over bears, taking up three quarters of the market (75%). The gap between the buy and sell commands narrowed. Now 51% of all orders are to acquire the Buck.

XAU/USD bounces back from 100-day SMA

“I think they're going to raise rates once in 2015, if only because they want to prove that they can do it.”

- Bill Gross (based on CNBC)

• Pair’s Outlook

  Influenced by mild bearish impetus, created by 100-day SMA and upper Bollinger band, the yellow metal declined in price on Wednesday. However, XAU/USD's losses used to be limited, and the closest demand at 1,200 did not let the bears to extend a drop. The support is currently created by weekly R1, as well as 20 and 55-day SMAs. In case Gold decides to resume its bearish tendency, it will have to close below 1,194 to confirm the near-term negative outlook. On the other hand, a closure above 1,214 will give the metal an opportunity to jump up to 1,222 (200-day SMA).

• Traders’ Sentiment

  Advantage of bulls over bears at the SWFX market is considerable at the moment, as the former are dominating by keeping 74% of all opened positions, up three percentage points from yesterday.