May 9, 2016

First, a review of last week’s predictions:

  • as for the forecast for EUR/USD, this pair succeeded to meet expectations of all experts. All of their forecasts turned out to be correct - those, who predicted its rise (from Monday to Tuesday, the pair rose to the level of 1.1616), the ones who predicted its drop (the pair afterwards went down to support at 1.1385), and the ones who predicted its sideways trend - due to fluctuations the pair returned almost to the same level it had started the week from. Such a mixed behavior of the pair, as noted above, was largely predetermined by the last week’s release of a series of economic data points from Europe and the USA;
  • as expected, these releases should influence the behavior of virtually all USD pairs, and that did not allow analysts to reach a consensus particularly in regard to the future of GBP/USD. As a result, the pair largely made the same movement as EUR/USD, and, after rising earlier in the week, it showed a steady fall in the latter half of the week, returning to the benchmark for the whole year of 2016 -  to support / resistance zone of around 1.4400 - 1.4500;
  • there was no consensus among experts about the future of USD/JPY either. As a result, the pair held onto the side channel, reflecting the behavior of EUR/USD and wrapping up the week virtually at the same level of 107.00 whereat it had consolidated last week;
  • as often happens, USD/CHF also tried to mirror the behavior of EUR/USD, but nonetheless it fully met expectations of both analysts and graphical analysis predicting its attempt to get closer to the level of 0.9800. The pair, however, failed to reach this high, but due to its impressive surge upward it got closer to the target and reached the mark of 0.9728.


Forecast for Upcoming Week:

Summing up the opinions of several dozen analysts from world leading banks and broker companies as well as forecasts based on different methods of technical and graphical analysis, the following can be suggested:

  • similar to the last week, the experts' opinions about future of EUR/USD are split almost equally - one third of analysts are for the rise of the pair to the zone of 1.1730 - 1.1800, one third are for its fall towards the support of 1.1200, and another third - for a sideways trend with pivot point of 1.1400. The opinions about indicators are also split - 60% on H4 vote for the pair's fall, and 75% on D1 are for its rise. If we focus on the graphical analysis, there is a prevalence of bearish trends here, according to which the pair must first go down to the first support zone of 1.1340, and then, after breaking through it, move 100 points lower. The local bottom of the current month is at 1.1000, which should be followed by a return to the pivot point of February - May at the level of 1.1280; 
  • but with regard to the behavior of GBP/USD, the majority of analysts (70%), as well as indicators and graphical analysis on H4 and D1 unanimously vote for the continuation of its declining. Target is at 1.4250 - 1.4300, which should be followed by a bounce upwards to the last week figures within 1.4430 - 1.4500;
  • USD/JPY. Here, according to experts, indicators and graphical analysis, we should expect the sideways movement of the pair within 105.50 - 108.00. And, the pair is very likely to rise to the upper boundary of the range, bouncing off which it should make another attempt to break through the support of 105.50 and go down first to the zone of 104.00, and then to the lows of spring and summer of 2014 at the level of 102.00. However, such movement can take from several weeks to a month;
  • as for the last pair of our review - USD/CHF - everything is just as it was - both 80% of experts and 85% of indicators and graphical analysis on D1 continue to insist on the pair striving to consolidate above the level of 0.9800. As already mentioned, the main resistance in this case will be at the level of 0.9900. The main support is 200 points lower - 0.9700.


Roman Butko, NordFX

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