EUR/USD retreats from 1.37

Technical Analysis

EUR/USD retreats from 1.37

“The market is definitely covering a little bit of risk after this decent little rally. We’ve had a decent correction higher after a near touch of $1.35 that we never really traded, but we we’ve had a decent correction since then.”

- Faros Trading (based on Bloomberg)

• Pair’s Outlook

  The 200-day SMA proved to be a formidable resistance level by forcing the currency pair to start ceding ground. The immediate support is at 1.3630/22, formed by the weekly and monthly pivot points. However, there is a good chance of a much deeper decline, down to 1.35, namely this year’s lows. The technical indicators, on the other hand, are mostly sending ‘buy’ signals, especially on the monthly time-frame.

• Traders’ Sentiment

  The sentiment remains slightly bearish towards EUR/USD—44% of positions are long and 56% are short. In the meantime, the percentage of the sell orders has noticeably increased since the previous report—from 50% to 60%.

GBP/USD heads towards 1.74

“Our economists agree with market consensus looking for non-farm payrolls to rise by more than 200,000 for a fifth consecutive month.”

- BNP Paribas (based on CNBC)

• Pair’s Outlook

  Even though the Sterling’s appreciation is currently decelerating, the upward momentum is likely to be preserved in the coming weeks. Once the currency overcomes the weekly R3 at 1.7172, there will be only the monthly R1 separating the spot and the mid-term target at 1.74 (monthly R2 and upper trend-line of the channel). The bullish outlook is also supported by a majority of the technical indicators, which are mostly pointing north.

• Traders’ Sentiment

  While there was no change in the distribution between the bullish and bearish market participants (26% bulls and 74% bears), the concentration of the orders set to sell the British Pound went up, from 55% to 61%.

USD/JPY’s bullish momentum gains traction

“The numbers from the U.S. job market came in much better than expected, which benefits the dollar.”

- Credit Agricole (based on Bloomberg)

• Pair’s Outlook

  USD/JPY draws closer to the major trend-line it has recently breached. Accordingly, the baseline scenario is a bounce off the resistance at 102.14 with a possible breach of 101.20 afterwards. But if the long-term technical studies turn out to be true and the U.S. Dollar keeps on recovering despite the 100 and 200-day SMAs, there will be a good opportunity for the currency pair to try to reach this year’s high at 104.

• Traders’ Sentiment

  The SWFX market participants remain largely convinced the greenback will continue gaining ground, being that 71% of them are holding long positions. At the same time, 67% of the orders placed 100 pips from the spot are to acquire the buck against the Yen.

USD/CHF underpinned by 100-day SMA

“While the ADP report may not be a 'game-changer', it will leave recently established short-dollar positions somewhat exposed and we would expect it to provide the currency with some degree of support heading into Thursday's full employment report.”

- HSBC (based on Reuters)

• Pair’s Outlook

  Despite the bearishness seen since mid-June, USD/CHF managed to find support at 0.8872/61 (100-day SMA). Nevertheless, the rally is likely to be short-lived, being that it is about to hit a dense supply area at 0.8928/18, consisting of 200-day SMA and monthly PP, among others. The technical indicators are also bearish, suggesting the bears are going to remain in control of the market in the foreseeable future.

• Traders’ Sentiment

  Regardless of the share of the long positions falling three percentage points, the sentiment stays strongly bullish with respect to USD/CHF—71% of open positions are long and the remaining 29% are short.