June 19, 2017
First, a review of last week’s forecast:
- It had been clear that the main moves for EUR/USD would begin on Wednesday 14 June, when the US Federal Reserve would officially announce a rate increase. Everyone was ready for this. What no one was expecting though was the sharp drop of the dollar 5.5 hours before this event. Taking advantage of negative data on the US consumer market, large speculators pulled the pair up by 100 points. As a result, the Fed's statement could only return it to the original value of 1.1200. However, the "bears" did not calm down there, and on Friday the pair reached the local bottom at 1.1130, after which it again returned to where it started the week: namely in the 1.1200 zone;
- As for GBP/USD, as expected, technical analysis proved useless last week. The pair made variously directed fluctuations with an amplitude of 100-150 points for the whole week, which were caused both by political factors and by the rate decisions of the US Federal Reserve and the Bank of England. Even though the latter left rates unchanged at 0.25%, it should be noted that instead of the expected seven members of the Monetary Policy Committee, only five voted for this decision. Three, wanting to stop the pound falling (or, perhaps, fearing the appearance of another George Soros), spoke in favor of raising the rate. We can infer from this that it is possible that the financial policy of Great Britain will face serious changes soon, with these changes being related primarily to the capital outflow and the terms for the country's withdrawal from the EU;
- USD/JPY. We can say, albeit rather liberally, that the forecast for this pair turned out to be correct. Recall that at the beginning of the week we expected the pair to move in a sideways trend in the range of 110.25-111.00 the range turned out to be 110.15-110.50). As a local minimum, experts had indicated 109.00 (the pair dropped to the level of 108.80), and the height of 112.00 was named as the maximum (the pair reached 111.40). As for the results of the week, it ended at the medium-term Pivot Point 110.85, along which the pair has been moving since mid-May;
- USD/CHF. As expected, the pair carefully copied all movements of the EUR/USD during the entire week, although it did this with less volatility. Thus, whilst the maximum fluctuation range of the euro/dollar was 165 points, for the Swiss franc it did not exceed 130.
As for the forecast for the coming week, summarizing the opinions of analysts from several banks and broker companies, as well as forecasts made on the basis of a variety of methods of technical and graphical analysis, we can say the following:
- EUR/USD. The only ones who took a neutral position this week were trend indicators: their votes on H4 and D1 were split approximately 50/50. As for the oscillators and graphical analysis, almost all of them point southwards. Almost 75% of experts agree with this view of events, considering that the pair will first fall to the support at 1.1100, and in the medium term even lower into the 1.0800-1.0900 zone. 1.1300 is indicated as the main resistance;
- As for the future of the GBP/USD, there is no unanimity among the indicators. H4, trend indicators, oscillators and graphical analysis all insist on buying the pair; D1 indicators suggest selling. In general, a fairly wide side corridor appears within the boundaries of 1.2580-1.2970. The picture among analysts, though, is quite different: the overwhelming majority of them (70%) have sided with the "bears", believing that the nearest target for the pair will be the 1.2600-1.2700 zone. The next target is 1.2400. The voices of the bulls’ supporters this week are very weak, and they all point to the May maximum at 1.3050;
- USD/JPY. 90% of experts believe that the uptrend for this pair is not yet complete, and it should necessarily try to break through resistance at 112.00. Graphical analysis on H4, as well as about 70% of indicators, agree with such developments. However, it should be noted that almost a quarter of oscillators indicate this pair is overbought. The main support in case of a fall is in the 109.00 zone;
- The last pair of our review is USD/CHF. Here, almost all indicators have turned green. Recall that, having fought off the lower border (0.9610) of the medium-term descending channel, which began at the very beginning of 2017, the pair started approaching the center. Now almost 80% of analysts and almost the same proportion of technical analysis instruments expect its further growth. The nearest resistance is 0.9810, the upper limit of the channel is 0.9910. However, almost 90% of experts do not exclude that the pair will not stop at this height and will soon overcome 1.0000.
Roman Butko, NordFX