Analys från DailyFX
EURGBP | AUDNZD
Talking Points:
- RBNZ and BoE may be the first to normalize monetary policies
- Be prepared to sell EUR/GBP on lower highs
- Look for further AUD/NZD selling opportunities in 2014
Keeping up with the 2013 forecast, the bearish trend for the EURGBP and the AUDNZD should continue to take shape in 2014 amid the deviation in the policy outlook.
It looks as though it will be a race between the Bank of England (BoE) and the Reserve Bank of New Zealand (RBNZ) as to who will be the first to start normalizing monetary policy, while the European Central Bank (ECB) and the Reserve Bank of Australia (RBA) may have little choice but to further embark on their easing cycle amid the growing threat for deflation.
EURGBP Daily
Chart created by David Song using Marketscope 2.0
Even though the EURGBP is a slower-burning trade, the long-term outlook remains tilted to the downside, as it retains the bearish trend dating back to 2009. However, a steeper decline appears to be take shape, as Mark Carney’s BoE moves away from the easing cycle. With that said, we will continue to look for a series of lower highs to sell the EURGBP, and the pair remains poised to face a pronounced decline in 2014, as the ECB prepares to implement more non-standard measures in the coming months.
AUDNZD Daily
The bearish trends in the AUDNZD should present more selling opportunities in 2014, and we will look to ‘sell bounces’ in the aussie–kiwi, as the pair looks poised to mark fresh lows next year. The 2008 low (1.0616) will be a key focus, as the AUDNZD clears the 78.6% Fibonacci retracement (1.1140-50) from the 2005 low (1.0428) to the 2011 high (1.3794), but we may see fresh record-lows over the medium-term, as the RBNZ adopts an increasingly hawkish tone for monetary policy.
What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email bysigning up here.
You can follow Paul on Twitter at@PaulRobinonFX.
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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