USD/JPY stuck between 123.00 and Nov high

Technical Analysis

EUR/USD is committed to penetrating 1.08

“With no major U.S. economic data until U.S. retail sales on Friday, commodity price themes will drive trading this week.”

- Commonwealth Bank of Australia (based on Reuters)

• Pair’s Outlook

  EUR/USD still continues to absorb a substantial rally of the previous week. There is more room for a rise up to the 55-day SMA at 1.0984 in the nearest future. However, the broader outlook favours the bearish scenario for the moment. We see 1.08 as the main goal of the short traders, which is represented by July low and weekly pivot point. Failure here would imply extra downside move in the direction of the monthly pivot point at 1.0724 and eventually the April low at 1.0519. Meanwhile, trading volume tumbled yesterday, meaning market volatility is likely to be reduced.

• Traders’ Sentiment

  The share of SWFX bears decreased from 57% to 56% in the past 24 hours. On top of that, pending orders to buy the Euro vs US Dollar improved for both 50 and 100-pip ranges from the spot price.

GBP/USD remains subject to weakness

“The pound has been trading on a softer footing in the near term. Pushed-back expectations of a BoE rate increases have removed one key support factor for the pound in the near term, thus leaving it more vulnerable to the downside for now.”

- Bank of Tokyo-Mitsubishi UFJ Ltd. (based on Bloomberg)

• Pair’s Outlook

  The British Pound edged lower against the US Dollar on Monday, with the immediate support in face of the weekly PP limiting the losses. However, the weekly PP is now providing resistance and weighing on the GBP/USD. The Sterling could decline towards the support cluster around 1.4960, which would mean an almost complete erasure of last Thursday’s gains. Nevertheless, a positive surprise in the UK fundamentals could help the Cable recover and retake the 1.51 major level, with the second target resting at 1.5138.

• Traders’ Sentiment

  There are significantly more bulls today (68%), compared to 59% on Monday. At the same time, the share of orders to acquire the Pound added 16 percentage points, now taking up 74% of the market.

USD/JPY stuck between 123.00 and Nov high

“JPY shorts have lost ground for a second consecutive week. The BoJ continues to indicate that it has little enthusiasm for extending its huge asset purchase programme at this stage.”

- Rabobank (based on WBP Online)

• Pair’s Outlook

  Yesterday the USD/JPY currency pair edged closer to the Nov high, but failed to touch the immediate resistance cluster. Today the Yen got the upper hand, as it was boosted by a stronger-than-expected Japanese GDP reading. The cluster around the 123.00 major level, namely the weekly PP and the 20-day SMA, should provide sufficient support, but the bullish momentum could still be regained, with the Greenback touching the upper Bollinger band at 123.55. Meanwhile, technical studies retain their mixed signals, unable to confirm either scenario.

• Traders’ Sentiment

  Bearish market sentiment returned to last Friday’s level of 71%, whereas the share of buy orders inched up from 62 to 64%.

Gold's correction is stopped by July low at 1,070

“Against the backdrop of sound growth, higher interest rates and muted inflation, gold should remain out of favour among investors.”

- Julius Baer (based on The Economic Times)

• Pair’s Outlook

  Volatility of gold prices remains quite high for the moment, as we are nearing the crucial meeting of the Fed, which is weighing on the Dollar's value. Yesterday we saw the bullion tumbling from Friday highs at 1,085 to July low around 1,070. The monthly pivot point used to be a heavy obstacle for the bulls, meaning short traders are confident in their commitment of pushing prices lower in the mid-term. We are watching the summer low today, a decline below which should prolong a sell-off in the direction of the long-awaited 2010 low at 1,044.

• Traders’ Sentiment

  After four-day period of losses for the bullish market participants, during which their portion decreased by ten percentage points, yesterday we observed little change in traders' priorities. The longs continue holding around 64% of all SWFX trades on Tuesday.

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