August 1, 2016
First, a review of last week’s forecast:
- as to EUR/USD one alternative forecast suggested that the pair would move in a sideways channel with the support of 0.9550 and the pivot point of 1.1000. The United States Federal Reserve Interest Rate Decision and the corresponding statements, due to be released on Wednesday, were supposed to change this trend. And that was the case: the miracle didn’t happen, to the utter disappointment of investors, the interest rate was kept on hold at 0.5%, and thus the greenback fell against euro by around 200 points;
- GBP/USD. The powers of bulls and bears turned out to be almost equal, and for the second consecutive week the pair had been moving within the range of 1.3070–1.3290 with the pivot point of 1.3200. Bearish sentiment was expected to predominate at the market, but news from the USA weighed in on here, whereby the pair ticked up a little bit and transited from the lower boundary of the sideways channel to the upper one;
- the forecast for USD/JPY reckoned that the retracement was over, and, having broken the support of 105.50, the pair would go south to the next support in the area of 103.50. But a reservation, declaring that the Bank of Japan Interest Rate Decision could make certain adjustments, was also made here. And as it turned out to be higher as it was expected (–0.1% versus expected –0.2%), yen reinforced its positions against the US dollar even more, reaching the level of 102.00 by the end of the week;
- USD/CHF – as it was expected, till the mid-week the pair kept bullish bias and went up to the mark of 0.9950. And then, as often happens during coming out of headline news, mirrored the acting of EUR/USD, and, having broken through the support levels of 0.9840 and 0.9800, it went down, wrapping up the week at 0.9700 - the area of the third support, indicated by experts.
Forecast for the 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:
- as to EUR/USD, opinions of experts were split equally. 50% of them, backed by the graphical analysis on H1 as well as by 90% of indicators on H4 and on D1, tend to believe that the pair will continue rising and try to consolidate in the area of 1.1250–1.1300. As for the second half of experts, in their opinion the pair is currently keeping within the upper boundary of the range of 1.0955–1.1190, having bounced off which it should start going south. With this it should be taken into account that on August 5, 2016 NFP data – the key indicator of economic health of the USA - will be released, and they usually result in plummeting of exchange rate of buck. According to some forecasts NFP for this month can drop from 287k to 175k;
- Brexit picture is still mixed, that’s why 75% of experts, backed by the graphical analysis and indicators on D1, believe that GBP/USD will continue its horizontal movement within the range of 1.3050–1.3335 with the pivot point of 1.3200. And only 15% of analysts do not rule out the possibility that it will try to retest July lows in the area of 1.2800 again. NFP data as well as ECB meeting on Wednesday and a series of headline news from the Bank of England, due to be released on Thursday, August 04, can influence formation of a new trend;
- as to the future of USD/JPY, 30% of analysts in line with 100% of indicators reckon that the pair will try to go down to the level of 100.00. Almost 40% of experts and the graphical analysis on Н4 and D1 do not agree with this version. In their opinion the level of 101.50 will become a strong support to the pair, and backing on it, the pair will make attempts to reach the resistance of 103.60, and if it will be broken through – even get to 106.50. And, finally, the third scenario is offered by remaining 30% of analysts, voting for a sideways trend alongside the pivot point of 102.50;
- as to the last pair of our review – USD/CHF, here experts along with the graphical analysis on H4 predict that the pair will move in a sideways channel of 0.9660–0.9720 for a while, and afterwards it will go down to the support of 0.9500. Such a scenario will be more likely if the forecast for change in NFP will turn out to be correct.
Roman Butko, NordFX