Morning Forex Technical

Daily Forex Technicals | Written by Dukascopy Swiss FX Group

EUR/USD falls sharply

‘Images of protests in Greece during Angela Merkel’s visit reminded markets that severe austerity measures imposed in Europe come at a large social cost, casting a dark shadow of doubt on a quick resolution in Europe’ – Credit Agricole (based on CNBC)

Pair’s Outlook

After breaching 1.2963/39 the currency pair dived to 1.2856/26 yesterday, which holds for now, but is nevertheless being eroded. The support is reinforced by a subsequent level at 1.2799/84, meaning that together they are likely to withstand bearish pressure. However, if this key area is breached, the medium-term outlook will be changed to a negative one.

Traders’ Sentiment

Bearish sentiment of SWFX marketplace participants has become even less distinct, as the difference between the shares of short and long positions has narrowed to 8% from 14% yesterday. Distribution among buy and sell orders also does not give a clear insight into current preferences of the market, being 53% to 48%, respectively.

GBP/USD struggles at 1.6000/1.5967

‘The trade balance and industrial production suggest that the [U.K.] economy may have struggled to recover in the third quarter’ – Citi (based on Reuters)

Pair’s Outlook

GBP/USD declined along with EUR/USD, although to a more modest extent. The currency couple is presently attempting to overcome 1.6000/1.5967 and is expected to remain on a bearish path, even though a chance of a consolidation/correction increases. The next target lies at 1.5911, while the nearest serious threat to current downward tendency is located at 1.5828/04 (200-day SMA).

Traders’ Sentiment

A considerable amount of traders, namely 63% of the market, are holding short positions on GBP/USD, expecting the Sterling to carry on depreciating relatively to the U.S. Dollar. Accordingly, only 37% of them believe in an alternative scenario and stay long on the currency pair.

USD/JPY stalls at 78.18/77.99

‘The tone of the market still feels greatly uncertain as we head into earnings season in the United States and indeed the market is now focusing its attention that way as it seeks out bad news wherever it can find it’ – Faros Trading (based on CNBC)

Pair’s Outlook

USD/JPY remains in proximity to a formidable support zone that stretches from 78.18 down to 77.99 and the pair is reluctant at the moment to challenge it. Still, since the price has recently bounced off a downtrend resistance line, it is anticipated to continue sliding lower. The next notable support should be found at 77.53/37, which is unlikely to give in, but rather initiate an eventual recovery.

Traders’ Sentiment

While the Japanese Yen stays as the most unpopular currency in the SWFX marketplace, being acquired only in 29% of cases, an overwhelming majority (72%) of positions opened on USD/JPY are long. As for the orders, 82% are to buy and 18% are to sell the greenback against of the Yen

USD/CHF advances towards 0.9406/46

‘It’s [USD] a good short-term and long-term play. The U.S. economy is looking much better than the other economies of the world. Europe has a possibility of a bad nick with the Greek situation’ – FX Concepts LLC (based on Bloomberg)

Pair’s Outlook

The price has disregarded a downtrend resistance at 0.9340/52 and soared up to 0.9406/46, thus forming a double bottom pattern, which implies a robust rally once the neckline is penetrated. The initial goal would then be at 0.9493/0.9503, while continuation of a surge could push the pair up to 0.9569/89. On the other hand, indicators give mixed signals

Traders’ Sentiment

Bulls have expanded their dominance in USD/CHF currency couple, as the Swiss Franc is the second least preferred currency after the Yen. Right now 73% of positions are long and only 27% are short, making the pair overbought. At the same time 51% of orders are buy and 49% are sell.

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