EUR/USD extends gains above 1.13

Technical Analysis

EUR/USD extends gains above 1.13

“When the Fed decides it’s time to begin raising rates, these term premiums could move up and we could see a sharp jump in long-term rates. So we’re trying to ... communicate as clearly about our monetary policy so we don’t take markets by surprise.”

- Janet Yellen, Fed Chair (based on Reuters)

• Pair’s Outlook

  For the first time since February 26, EUR/USD went above the 1.13 mark, by eroding a considerable resistance represented by the 23.6% Fibonacci retracement of May-March downtrend move. Poor US ADP data resulted in a decline of the Buck against the Euro in the direction of weekly R1. Bulls are likely to give a try and sustain the pair's growth, while a closure above 1.1383 should pave the way towards 1.15 in the medium-term. Alongside, a short-term pullback is not off the table as well.

• 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 40% of all opened positions.

GBP/USD attempts to negate last Friday’s losses

“Some commentators have suggested that sterling has already been undermined by political uncertainty. But in fact its recent performance against the dollar can adequately be explained by movements in interest rate differentials between the US and UK.”

- Capital Economics (based on WBP Online)

• Pair’s Outlook

  On Wednesday, the Sterling appreciated against the Dollar, as was expected. The 1.52 level was crossed and the Cable even reached out to 1.53; however, the weekly PP stopped the climb, forcing the pair to settle at 1.5239. Today the British Pound is likely to extend the rally, while technical indicators are showing distinctly bullish signs. Immediate resistance retains its position at 1.5252, although a surge beyond 1.53 is more possible. Further resistance lies at 1.54 psychological level, which is also bolstered by the weekly R1.

• Traders’ Sentiment

  Market sentiment among SWFX traders improved, as 49% of traders are now long the Sterling. The number of buy orders shifted to the minority, as also 49% of them are now to acquire the Pound.

USD/JPY on the verge of breaking under 119

“While the widening in US-Japan spreads looks USD-supportive, we suspect that USDJPY is likely to remain range-bound for a little longer.”

- TD Securities (based on FX Street)

• Pair’s Outlook

  The Greenback suffered heavy losses against the Yen yesterday. The support cluster around 119.64 failed to stop the fall, while the 20-day SMA succeeded. As a result, USD/JPY stabilised at 119.39, after having tested the 100-day SMA at 119.24. The previous support cluster now acts as a resistance, although further weakness is expected. Poor fundamental figures are likely to push the US Dollar further down to around 119.00 level, which is also backed by the weekly S1. Meanwhile, technical studies retain their mixed signals.

• Traders’ Sentiment

  Slightly less traders now have a positive outlook towards the USD/JPY, as one percentage point less (56%) of all positions are long. The share of buy commands, on the other hand, increased to 67%.

XAU/USD fails to overcome monthly PP

“Yellen’s comments that bond yields could see a sharp jump continued to weigh on gold.”

- Australia & New Zealand Banking Group Ltd. (based on Bloomberg)

• Pair’s Outlook

  Despite disappointing US fundamentals, the yellow metal remained unusually tranquil in terms of reaction to the data. From the technical point of view, there were attempts to violate the monthly PP at 1,194, but this resistance and the 20-day SMA managed to withstand bullish pressure. From another side, XAU/USD is currently supported by the weekly PP at 1,187, meaning that the cross seems to trade range bound at the moment. A closure beyond any of these two lines will provide Gold with an opportunity to show more pronounced development either to the upside or to the downside.

• 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 one percentage point from yesterday.