March 19, 2017
First, a review of last week’s forecast:
- The first part of the forecast for EUR/USD talked about the fall of the pair to 1.0600, which ended up happening by Tuesday evening. The fate of its future, as had been expected, was determined by the plethora of news from the USA on March 15. The Fed's decision on the interest rate, J. Yellen's press conference, and President D. Trump’s speech deployed the pair northward, as a result of which it approached December 2016-January 2017 highs in the 1.0775-1.0830 zone;
- Giving a forecast for GBP/USD, 60% of experts, along with graphical analysis on H4, sided with the bulls. They considered that the pair had already reached the local bottom and was now awaiting a rebound upwards to the resistance of 1.2300, and beyond to 1.2385. The forecast proved 100% correct, with the pair completing the week at 1.2400;
- USD/JPY. Here, the opinions of analysts were divided exactly halfway - 50% were in favour of the growth of the pair and 50% were for its fall. The argument of the latter was that 114.75 constituted the upper boundary of the eight-week lateral channel and was impenetrable as a resistance level, as a result of which the pair would have to go down to the support at 112.60. This scenario occurred with 100% accuracy.
- As for USD/CHF, despite the bullish mood of most experts, the forecast foresaw the possibility of a breakdown of the lower boundary of the six-week upward channel, which was what happened due to the decision, forecasts and comments of the US Federal Reserve. In the event of such a development, it had been assumed that the pair would find its local minimum at 0.9966. It was in this zone that the pair ended up completing the weekly session.
Forecast for the coming week:
Summarizing the views of a number of analysts from leading banks and brokerage firms, as well as the forecasts made on the basis of a wide variety of technical and graphical analysis methods, we can say the following:
- Although 15% of oscillators on D1 indicate the EUR/USD is overbought, the overwhelming majority of indicators points strictly northwards. Analysts' opinions are divided almost equally, 40% support the growth of the pair, 40% its fall, and 20% foresee a sideways trend. Graphical analysis on D1 offers the compromise view. According to this, the pair will be moving in the 1.0640 - 1.0850 channel in the near future. At the same time, graphical analysis on H4 also spells out a strong support level at the horizon of 1.0700. When it comes to the medium-term forecast, 70% of experts expect the pair to fall to February lows in the 1.0500 zone, and possibly 150 below that;
- In contrast to the previous pair, almost 30% of the oscillators on both H4 and D1 indicate that GBP/USD is overbought. This bearish stance is supported by about 65% of experts and graphical analysis on H4. In their view, the pair has reached the local maximum and they now expect it to decline to 1.2100. An alternative scenario is possible in case of breakthrough of resistance 1.2400. In this case, the pair will begin a lateral movement in the 1.2385-1.2570 range. At the same time, 10% of analysts believe that it may even rise to 1.2700;
- USD/JPY is now close to the strong medium-term support level of 112.60. That is why the majority (60%) of experts expect its rebound to the upper boundary of the side channel of 2017 in the area of 115.00. However, graphical analysis warns that before the start of the rise the bears may take over for a certain period. Because of that, the pair would fall to the February-March lows of around 111.60;
- As for the last pair of our review, USD/CHF, apparently, its fall last week made a strong impression on the experts. 70% of them expect it to continue plummeting to at least the support at 0.9870-0.9900. However, afterwards, according to the overwhelming majority of these experts, the pair will resume an uptrend and rush back upwards to 1.0330.
Roman Butko, NordFX