USD/JPY struggles to preserve the channel

Technical Analysis

EUR/USD treads water as FOMC minutes near

“The [FOMC] minutes will reveal “a willingness to hike interest rates this year.”

- Daiwa Capital Markets (based on MarketWatch)

• Pair’s Outlook

  Yesterday the bears tried to take leadership over the EUR/USD currency pair, but all losses were ultimately eroded by revived bullish strength. Therefore, the cross keeps hovering around the February high at 1.1370, while getting ready for the release of FOMC meeting minutes later on Wednesday. A more hawkish surprise here will likely provoke a downshift in prices to the weekly pivot point at 1.1326, which is acting as the first immediate support line. However, aggregate daily technical studies are bullish and we are still not ruling out a spike towards the 1.15 area (Oct high; weekly R1).

• Traders’ Sentiment

  For a second consecutive day the total number of SWFX's bearish and bullish traders is holding at the same level of 60% and 40%, respectively.

GBP/USD poised for more weakness

“Given that we've been told that the remain voters are less likely to vote and that the level of undecideds is still very significant, it's perhaps unsurprising that sterling remains very vulnerable.”

- Rabobank (based on CNBC)

• Pair’s Outlook

  The British currency experienced a rather sharp sell-off yesterday, edging below the six-week up-trend, with trade closing at 1.4162. The Sterling risks falling deeper down today, depending on the FOMC meeting results. Technically, a drop beyond the 1.41 psychological level is unlikely to occur. The weekly S1 and the Bollinger band also form a strong demand area around 1.4070, in case bears pull the exchange rate further down. According to technical indicators, the Pound has the potential to negate some of Tuesday’s losses, while the resistance cluster around 1.4270 is to prevent the Cable from appreciating if the bullish momentum prevails.

• Traders’ Sentiment

  Today 66% of all open positions are long (previously 69%), whereas the portion of buy orders increased again, namely from 53 to 62%.

USD/JPY struggles to preserve the channel

“It's quite difficult for the Japanese government to resort to measures directly aiming at reversing yen strength, like FX interventions or BOJ's additional easing, what the Japanese government can do at present is just to proceed with the organization of the fiscal stimulus package.”

- Citigroup Securities (based on Reuters)

• Pair’s Outlook

  Risk aversion caused the USD/JPY currency pair to experience a decline on Tuesday, with the pair edging lower towards the descending channel’s support line. Although the channel lower border should trigger a rebound, risks of the pattern being broken are also high. Technical studies support the negative outlook with their bearish signals, while a catalyst for the movement in either direction is required, which today’s FOMC meeting should provide. A fall towards 109.00 major level is expected if bears take over the market, but if bulls prevail, the US Dollar might even climb back over the 111.00 mark.

• Traders’ Sentiment

  Traders’ sentiment remains bullish, taking up 73% of the market, compared to 70% on Tuesday. Meanwhile, the share of sell orders returned to its Monday’s level of 62% (previously 63%).

Gold closes above 1,230 as bearish risks stay

“Investors are taking off riskier assets in the S&P 500 and other equities, and looking to come back into safety like gold.”

- RJO Futures (based on Bloomberg)

• Pair’s Outlook

  On Tuesday gold prices soared for the first time in three days, as bullish action pushed the spot beyond 1,230. The price closed slightly above it, namely the 20-day SMA, but another downside correction is highly possible today, given that daily technical indicators are short. A lot depends on the news from the Fed today. Dovishness may easily help to bullion to grow up to the next resistance at 1,241 (weekly R1/monthly PP). Contrary to that, a slide under the weekly pivot point should expose the 55-day SMA (1,209), which has got a steep upside slope and should contain a selloff.

• Traders’ Sentiment

  On Tuesday the distribution between long and short SWFX market participants has been flat, as both sides remained committed to earlier-opened positions. Therefore, the former are currently holding the 46% share and the latter are enjoying a moderate majority of 54%.

 

 

 

 

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