GBP/USD muted, awaits interest rate decisions

Technical Analysis

EUR/USD in limbo around 1.1250

“If we’re dealing with a global demand shock emanating from China, the euro zone, and Germany in particular, could be quite badly exposed.”

- Credit Agricole (based on Bloomberg)

• Pair’s Outlook

  The outlook for the EUR/USD currency pair remains unclear for the time being as neither bulls nor bears are still able to overtake leadership of the market. Yesterday the cross remained capped by the 50% Fibonacci retracement of the Jan-Mar 2015 downtrend at 1.1280. On the other hand, demand is being created by monthly and weekly pivot points at 1.1241/20, as well as the 20-day SMA between them. While daily technical studies are giving mixed signals, we are also going to take a neutral approach with respect to EUR/USD's nearest future.

• Traders’ Sentiment

  The share of bulls was unchanged at 49% in the past 24 hours, while long pending orders in 100-pip range from the spot price improved further from 52% to 54%.

GBP/USD muted, awaits interest rate decisions

“The US should wait to raise policy rates until there are further signs of inflation rising steadily, with continued strength in the labor market.”

- IMF (based on WBP Online)

• Pair’s Outlook

  The Cable prolonged its rally for another day on Wednesday, reaching the target resistance cluster around 1.53. The Sterling opened trade today in between the mentioned cluster’s levels, with more of those supporting the pair. Even though the pair should extend its rally, risks of returning back to 1.52 persist, due to fundamental market movers. Technical studies also provide no insight on the GBP/USD’s movement today, although the weekly signals remain bearish. In case of a sharp USD selloff, the Pound could retake 1.54 level and even reach the 100-day SMA near 1.55.

• Traders’ Sentiment

  Today 62% of traders hold long positions, compared to 64% yesterday. The share of buy orders also worsened, from 59 to 54%.

USD/JPY anchored around 120, Fed rate hike in sight

“Downside risks to USD/JPY should be limited thanks to expectations for easing.”

- Nomura (based on FXStreet)

• Pair’s Outlook

  The USD/JPY dropped to the support cluster at 119.80 yesterday, which caused the pair to retreat back above the 120.00 major level. Nevertheless, the Buck is likely to fall even deeper today, amid rising concerns of the Fed’s rate hike delay. A dovish tone might push the Greenback all the way down to the 118.50 mark, as that area kept the US Dollar from edging lower for more than seven months. Contrariwise, any reassurance of a 2015 rate hike should boost the Buck, helping it elevate to 121.00

• Traders’ Sentiment

  Market sentiment remains bullish, with 72% of all positions being long, down from 73% yesterday. The portion of purchase orders dropped down as well, now taking up 55% of the market.

Gold trades range bound above 100-day SMA

“We have to suspect that as U.S. macro data starts to deteriorate, the dollar will likely continue to weaken from here, providing further upside to impetus for gold.”

- INTL FCStone (based on CNBC)

• Pair’s Outlook

  On Tuesday and Wednesday the bullion repeated development seen on Friday and Monday, respectively. Following a strong advance two days ago, gold remained broadly unchanged in the past 24 hours. It seems that narrow trading boundaries are being built by the monthly R1 at 1,147 and 100-day SMA, currently at 1,142. A failure at the latter level would expose a strong demand zone at 1,130/32. From the other side of the coin, only a spike above 1,155 (Aug 24 high/weekly R1) can affirm any of bullish intentions among market participants.

• Traders’ Sentiment

  For the past four working days the share of SWFX bullish open positions has remained largely stable, while yesterday their portion added only one percentage point from 52% to 53%.

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