EUR/USD touches downtrend at 1.13 after Yellen

Technical Analysis

EUR/USD touches downtrend at 1.13 after Yellen

“The actual U.S. dollar decline has been more dramatic than we expected.”

- Commonwealth Bank (based on Bloomberg)

• Pair’s Outlook

  EUR/USD became pretty much buoyant on Tuesday after dovish remarks by the Fed Chair Janet Yellen. Initial resistance area was penetrated relatively easily, while successful testing of the weekly R1 at 1.1250 paved the way for a surge up to 1.13. Daily technical indicators suspect the pair will extend the rally until the second supply zone for today at 1.1340. There we have got the current March high, weekly R2 and another downtrend line. In case the advance is not contained, the attention will then switch to the Feb high at 1.1377. Future dips have to be temporarily capped by the 55-day SMA at 1.1063.

• Traders’ Sentiment

  For the moment about 43% of all positions are bullish, down from 46% on Tuesday. However, almost 60% of pending orders in both 50/100-pip ranges are still set to acquire the Euro.

GBP/USD attempts to climb over 1.44

“Such a cautious [Fed] stance suggests a rate hike in April is unlikely, and there are increased doubts that the Fed will be ready to move in June.”

- Westpac (based on CNBC)

• Pair’s Outlook

  On Tuesday the British currency gained 130 pips against the US Dollar, surging due to Fed Yellen’s dovish statement. Sufficient supply in face of the weekly R1 caused the Cable to close trade just under the 1.44 major level, but the GBP/USD currency pair now has the potential to edge higher. In case the weekly R1 is breached, the next target will be the monthly R1 and the Bollinger band around 1.4465. However, technical studies retain their mixed signals, suggesting that a possibility of a the Sterling retreating towards the 1.43 mark persists, with the 20 and 55-day SMAs preventing the Pound from falling deeper down.

• Traders’ Sentiment

  Bulls gave in today, as there are now 48% of open positions, compared to 63% on Tuesday. At the same time, the number of orders to acquire the Cable dropped from 56 to 43%.

USD/JPY en route to 112.00

“After last week's comments from Fed officials who suggested that rates could be raised in April, dollar bulls hoped that Yellen would confirm their less dovish posture.”

- BK Asset Management (based on Business Recorder)

• Pair’s Outlook

  Fed Yellen’s statement yesterday caused the USD/JPY currency pair to fall back under the 113.00 level, therefore, preserving the descending channel pattern. As was anticipated, the dips were limited by the weekly PP, but with the Buck now under pressure, this pivot point is expected to be pierced. Consequently, the Buck could sustain sharper losses and close under 112.00, as the closest support is located only around 111.60, represented by the weekly S1 and the Bollinger band. The outlook is that the given pair should keep falling towards the channel’s lower border around 110.50. A failure to break through the weekly PP is likely to cause a short-term recovery towards 113.24.

• Traders’ Sentiment

  There are 72% of traders being long the Greenback, opposed to 71% on Tuesday. Meanwhile, the share of sell orders increased from 50 to 55%.

Gold price soars beyond resistance at 1,227/34

“Gold bugs might like to stay bullish, they are not foolish and would like to take profit from the recent rally.”

- Wing Fung Financial Group (based on Bloomberg)

• Pair’s Outlook

  Along with tumbling US currency, the bullion skyrocketed the most in two weeks yesterday. Prices pierced through the immediate resistance area of 1,227/34 and encountered the Feb-Mar uptrend line at 1,240. We would allow for a short-term selloff today as a part of post-growth correction lower. Outlook for the future remains depressed, as the rebound looks unsustainable. A spike above the first weekly resistance and March 23 high (1,247) should improve expectations, but daily technical studies generally think that the best option to choose on Wednesday is the wait-and-see mode.

• Traders’ Sentiment

  Active trading conditions and ultimate gains for XAU/USD forced a closure of many bullish open trades. Therefore, a negative gap between the bulls and bears widened to 22% by Wednesday morning, up from only six pp 24 hours ago.

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