USD/JPY takes another crack at 125

Technical Analysis

EUR/USD rallies 230 pips, most since March 18

“Core inflation is likely to stay near current levels in coming months… and this should see the euro weaken against the U.S. dollar.”

- Goldman Sachs (based on CNBC)

• Pair’s Outlook

  EUR/USD surged the most in more than two months on Tuesday, helped by the Euro zone returning to inflation. Bullish movement was only stopped around the 1.1150, when the pair had already accumulated a 230-pip daily climb. A number of important resistances were violated, and now the pair is free to jump further up to the weekly R3 at 1.1245. However, downside risks are not off the table, especially in case the Euro fails to consolidate strongly above 1.1089 (monthly PP; 100-day SMA).

• Traders’ Sentiment

  The gap between long and short positions at the SWFX market is unchanged at eight percentage points at the moment, as bulls are still holding 46% of all opened positions.

GBP/USD to resume sliding down

“The bullish RSI on intraday timeframe and a break above strong resistance of hourly 50-MA in the previous session, indicates the pair is more likely to extend the gains to 1.5417 today.”

- Omkar Godbole (based on FX Street)

• Pair’s Outlook

  The strong support cluster around 1.52 managed to not just turn the Greenback around, but even give a solid nudge. As a result, Cable surprised with its performance on Tuesday, as pair erased Monday’s losses and went over the 1.53 area. However, technical studies are showing bearish signs today, suggesting the correction will not last, and GBP/USD will maintain the bearish trend. A major resistance cluster rests around 1.5390, which is expected to either limit the possible rally, but most likely push the Cable back down to 1.53.

• Traders’ Sentiment

  Market sentiment improved again, as 59% of all positions are now long (previously 53%). The number of buy commands also increased, from 57 to 77%.

USD/JPY takes another crack at 125

“The upshot is that the currency should continue to depreciate, which would lift the yen-value of exports and repatriated earnings from overseas subsidiaries.”

- Capital Economics (based on WBP Online)

• Pair’s Outlook

  In spite of all expectations, USD/JPY declined yesterday. The worse-than-expected US fundamental data weighed on US Dollar, forcing it to lose ground and fall back under the 2007 high. However, this was likely just a setback in the Greenback’s bullish trend, as the Buck is expected to rebound today. The 2007 high is to be left behind once more, but the nearest resistance rests beyond hand’s reach. The 125 psychological level is the target, while technical indicators are now giving bullish signals, bolstering the positive outcome.

• Traders’ Sentiment

  Bullish SWFX sentiment returned to its Monday’s level of 54%, whereas the share of purchase orders slid one percentage point to 55%.

XAU/USD nears weekly PP at 1,193

“Prices are likely to remain sensitive to monetary policy expectations. Expectations for a delay in liftoff of rates would be interpreted as positive for gold.”

- HSBC Securities (based on Bloomberg)

• Pair’s Outlook

  For the first time in five days the precious metal registered a more pronounced daily move, while appreciating above the 1,190 mark. The bullion is now approaching the weekly pivot point at 1,193. However, a breach of this resistance does not guarantee any further gains, specifically taking into consideration a dense supply area at 1,197 (monthly PP, 55-day SMA and 20-day SMA). XAU/USD requires a close above this mark to affirm the medium-term bullish expectations.

• Traders’ Sentiment

  Advantage of bulls over bears at the SWFX market decreased additionally during the previous trading day, as the total share of long opened positions went down by one percentage point to 54% in the morning on Wednesday.