EUR/USD plunges below 1.10

Technical Analysis

EUR/USD plunges below 1.10

“Inflation is speeding up a little in the U.S., and we can see the intention to raise rates sometime this year.”

- Okasan Securities Co. (based on Bloomberg)

• Pair’s Outlook

  The Euro dropped considerably on Friday, following a short-term rebound back on Thursday. All in all, EUR/USD traded between 1.12 and 1.10, while closing the trading session at the lower bound of this 200-pip range. The 1.10 mark is also represented by the monthly PP, which capped the overall sell-off of the pair. In case the Euro consolidates below this line on Monday, the attention will refocus on the next major support at 1.0860 (weekly S1; Bollinger band).

• Traders’ Sentiment

  The gap between long and short positions remains biased in favour of the latter, as bulls are currently keeping only 47% of all opened positions. Alongside, commands to buy the Euro against the US Dollar in 100-pip range from the spot gained 14% to 51%.

GBP/USD to weaken again after channel breach

“The flow is shifting back in favour of the dollar, hurt recently by spotty economic data and receding likelihood of an early rate hike. Comments by policymakers has also helped.”

- FPG Securities (based on Reuters)

• Pair’s Outlook

  The Cable suffered heavy losses on Friday, amid better-than-expected US fundamentals. As a result, the Sterling breached the channel lower trend-line, breaking out of the pattern, and found support at 1.5475, namely the 20-day SMA. The GBP/USD opened trade under the mentioned SMA, therefore, more downside volatility is anticipated today, with immediate support located at 1.5408, represented by the 200-day SMA. Technical indicators are now giving mixed signals, unable to confirm the scenario.

• Traders’ Sentiment

  SWFX traders’ sentiment slightly improved, as 46% of all positions are now long (previously 45%). The portion of buy orders dropped by 20 percentage points, as they now take up 49% of the market.

USD/JPY closing in on Dec 2014 high

“Whether the dollar can breach the 122.04 yen threshold depends on upcoming U.S. data. While a June rate hike is no longer a likelihood, upbeat indicators that would back up Friday's CPI numbers will fan hopes that the Fed will provide hints at the June meeting on when it might hike rates.”

- IG Securities (based on CNBC)

• Pair’s Outlook

  The USD/JPY maintains strong uptrend, as the pair gained 50 more pips last Friday. During the trading session, the US Dollar did edge down against the Yen, breaching the immediate support level, but the exchange rate still closed above the Bollinger band at 121.54. Although technical studies retain mixed signals, today we expect the Greenback to rise again. The Bollinger band along with the Dec 2014 high provide solid resistance around 121.80, which should limit any substantial gains.

• Traders’ Sentiment

  Bullish market sentiment returned to its Thursday’s level of 58%. Meanwhile, the number of purchase orders increased, from 69 to 77%.

XAU/USD is refused by 200-day SMA

“Yellen's comments and the positive impact it has had on the dollar is not helping gold.”

- a precious metals’ trader in Singapore (based on CNBC)

• Pair’s Outlook

  On Friday, the precious metal attempted to develop beyond the major cluster of resistances at 1,214. However, 200 and 100-day SMAs, weekly PP and monthly R1 rejected this idea from bullish side and pushed the Gold back to the downside. At the same time, the bullion is also supported by the 20-day SMA at 1,203, which has been limiting the metal's losses for three consecutive days. Therefore, only a jump above 1,214 or a drop below 1,203 will determine the bullion's future intentions. Meanwhile, daily technical indicators are bullish, while weekly and monthly ones give the aggregate signal to sell Gold.

• Traders’ Sentiment

  Advantage of bulls over bears at the SWFX market is remaining insignificant, even though the gap between them increased over the past 72 hours. The total share of bulls currently stays at 55% versus 45% for bears.