GBP/USD on the path of negating last week's losses

Technical Analysis

EUR/USD is bearish

“In the near term, risk aversion leading to lower U.S. rate hike expectations, and investors cutting short positions in euro may contribute to gains in the currency. Over the long run, the euro is likely to remain in a downtrend owing to its quantitative monetary policy measures.”

- Royal Bank of Scotland Group Plc (based on Bloomberg)

• Pair’s Outlook

  Yesterday the pair has nearly reached the target level of 1.1150, but now there is very little hope the recovery is going to continue. The gains are expected to be capped by the falling resistance line and the 55-day SMA at 1.11. Over the next few weeks the price will likely decline through the nearby supports and test the emerging support line at 1.09. At the same time, a close above 1.1150 will imply a move towards the 200-day SMA at 1.1260.

• Traders’ Sentiment

  The market remains net short the Euro, and the difference between the shares of bulls and bears stays at 16 percentage points. Concerning the orders placed in the market, there are now insignificantly more sell commands (55%) than there are buy ones.

GBP/USD on the path of negating last week’s losses

“The international dimension for the Fed is whether they think the relevant central banks can deal with the shocks their economies and assets markets are facing. Contagion would have to be much sharper to really register as a proximate risk sufficient to affect U.S. policy.”

- CitiFX (based on CNBC)

• Pair’s Outlook

  Surprisingly, the Cable appreciated on Monday, even despite better-than-expected US fundamental data. The Sterling even attempted to reach the 1.56 major level, but stabilised at 1.5562, as it was pushed back by the monthly PP. Today the pair opened above a strong support cluster, represented by the 20 and 55-day SMAs and the weekly PP, which altogether should cause the British Pound to rally again. As a result, the 1.56 is likely to be reconquered, but with the weekly R1 limiting any further growth.

• Traders’ Sentiment

  The portion of people with the positive outlook towards the Sterling remains unchanged at 51%. Meanwhile, the share of orders to acquire the British currency increased from 41 to 55%.

USD/JPY gives 124.00 another shot

“The Fed may use the July FOMC statement to set up the September hike, by nudging the market further with tweaks to the language. Most likely this comes from the upgrades to economic conditions in the first paragraph.”

- TD Securities (based on WBP Online)

• Pair’s Outlook
  
  The US Dollar completely ignored the positive fundamental data yesterday, as it declined against the Yen. The strong support cluster failed to hold the losses, as the USD/JPY dropped to a daily low in face of the weekly S2. Nevertheless, a rebound is expected to take place today, providing a chance for the Buck to erase Monday’s losses. The main target remains the 124.00 psychological level, which could be failed to be reached, as the weekly PP is blocking the path at 123.93. Technical studies retain their bullish signals in all timeframes, suggesting the Greenback is to surge today.

• Traders’ Sentiment

  Market sentiment improved again, as 74% of traders are now long the Buck, whereas the share of buy orders slid from 74 to 69%.

XAU/USD hesitates to leave 1,100

“We're still expecting a fourth-quarter lift-off in the Fed funds rate and that's when you'll see the trough in gold or we could potentially see gold take another leg lower.”

- ANZ Bank (based on CNBC)

• Pair’s Outlook

  The bears are not as active as expected, but the outlook will remain negative as long as resistance at 1,100 is intact. We still expect the technical indicators to turn out correct by gold gaining strong downward momentum and head towards the 2010 low at 1,045. Below this support is the 2008 high at 1,032. An alternative course of events is a breach of 1,100 and a subsequent rally back to the 2014 low, where bulls may start taking profits and thus renew a sell-off.

• Traders’ Sentiment
  
  Bullish traders are currently building up their presence in the SWFX market. The percentage of long positions has increased up to 75% since the previous report, leaving the bears in an even more distinct minority.