EUR/USD was successful at testing 55-day SMA

Technical Analysis

EUR/USD was successful at testing 55-day SMA

“The euro’s gains are the continuation of the positioning unwind after the ECB’s underwhelming December meeting.”

- Standard Chartered (based on Bloomberg)

• Pair’s Outlook

  EUR/USD booked another bullish trading session on Wednesday, as the currency pair spiked above 1.10 to touch the most important 200-day SMA at 1.1031. Another moving average, the 55-day SMA, used to be an easy target for the bulls yesterday, and it was penetrated relatively quickly. Now we are watching the 200-day SMA, which is immediately followed by 100-day SMA at 1.1061. In case both of them are violated, it will proclaim a significant advantage of the bulls in the market. Otherwise, EUR/USD is at risk of coming back under the 1.10 mark soon.

• Traders’ Sentiment

  Bearish market share decreased from 57% to 56% during the previous trading session. In addition to that, pending orders became strongly Euro-positive for the first time in several weeks.

GBP/USD muted ahead of BoE meeting

“We often hear that the bulk of US dollar strength is behind us. We find the subliminal message (no longer worth being long) misleading.”

- Societe Generale (based on PoundSterlingLive)

• Pair’s Outlook

  The US currency experienced an unexpectedly sharp sell-off on Wednesday, leading the Cable to a fresh two-week high. The two immediate resistances were broken, but the third one, namely the monthly PP and 23.60% Fibo, was able to cap the gains. The Sterling still has room to advance to the 1.53 major level, a break of which would imply the end of the falling wedge pattern, but the 23.60% Fibo is expected to cause a correction today. As a result, the Pound is likely to pierce through the closest support in face of the 20-day SMA and touch the psychological area of 1.51.

• Traders’ Sentiment

  Bears are now in the majority (52%), while pending orders in the 100-pip range are equally divided between the buy and the sell ones.

USD/JPY attempts to recover from harsh sell-off

“The extent of USD weakness over the past week reduces the danger of a post-Fed squeeze on USD longs and makes it less likely that the Fed Chair will dwell heavily on foreign exchange risks when she speaks at the press conference.”

- BNP Paribas (based on Reuters)

• Pair’s Outlook

  Broad US Dollar selling caused the strong support around 122.30 to be broken, which resulted in the USD/JPY stabilising on the edge of the third support at a one month low. Today the Greenback faces a rather strong resistance cluster, represented by the weekly S2, the 55, 100 and 200-day SMAs around 121.60, which might trigger more weakness and lead the pair down to 121.00, where the weekly S3 coincides with the monthly S1. However, a rebound is also possible, with the Buck climbing over the immediate resistance cluster and closing trade around the 122.00 major level.

• Traders’ Sentiment

  Bears allowed the bulls to regain some numbers, as 69% of all positions are now long. The share of buy orders slid from 68 to 42%.

Gold remains under bearish pressure

“Gold remains locked in a fairly tight range as investors are either sitting on the sidelines or are set in their positions already leading into next week's FOMC meeting.”

- ANZ (based on WBP Online)

• Pair’s Outlook

  The bullion saw its value climbing in the direction of the monthly pivot point on Wednesday. However, the bears were allowed to register the day-end losses, thus sending the price back below the 20-day SMA to 1,072. The long upper shadow formed by XAU/USD means that the US Dollar's bulls are keeping commodities under pressure before next week's Fed meeting. A rally is not off the table, but we expect the monthly PP at 1,086 to try preventing the bullish outcome, as it happened earlier last week. At the same time, a sufficient demand was set up by weekly PP and July low at 1,073.

• Traders’ Sentiment

  Market sentiment with respect to the yellow metal has remained broadly flat during the previous trading day. We observed the total number of bullish positions rising from 62% to 63% in the SWFX market.

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