July 9, 2017
First, a review of last week’s forecast:
- EUR/USD. As a result of a powerful breakthrough in late June, the pair reached the upper boundary of the side channel in which it has been moving for more than two years since the winter of 2015. It was this that gave reason to expect the pair to fall. Recall that this scenario was supported by 35% of experts and the quarter of the oscillators who signaled it was overbought. The level 1.1300 was named as the local minimum, and the pair reached it on Wednesday (1.1312). Having fulfilled this task ahead of schedule, it returned to the upper border of the channel and finished the week near 1.1400;
- As for GBP/USD, having approached the high of 2017, it reached critical values in late June, just like to EUR/USD. That is why 55% of analysts voted for its decline, identifying the support at 1.2815 as the target. As early as Monday the trend indeed made a reversal downwards, but the low point, which the pair managed to reach by Friday, was 50 points higher at 1.2865;
- USD/JPY. Here, 40% of experts and almost 100% of indicators voted for the growth of the pair. The level 114.35 was named as the top point. This forecast came true by 100%, and the pair climbed more than 200 points by the end of the week’s session, reaching 114.20;
- The most accurate forecast for USD/CHF was given by graphical analysis, which traced its back and forth motion in the lateral channel 0.9520-0.9650. That's exactly what happened: at first the pair rose to the upper border of the channel. Then, the bulls attempted to break it, but their strength was exhausted at 0.9685 and the pair turned southwards, ending the week near the strong support / resistance zone at 0.9635.
As for the forecast for the coming week, summarizing the opinions of analysts from a number of banks and brokerages, 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. This time, both experts and technical analysis voted overwhelmingly for the growth of the pair. 70% of analysts, graphical analysis on H4 and almost 100% of indicators agree with this scenario. In their opinion, the pair will try to break through the horizon 1.1500 and, if this attempt proves successful, rush even higher to the 2016 high at 1.1620.
The alternative forecast can hardly be called alternative, since it's not about the fall of the pair, but about its lateral movement within the boundaries of 1.1300-1.1445. The remaining 30% of experts, graphical analysis on D1 and only one oscillator, indicating that the pair is slightly overbought, agree with this.
It should also be noted that, despite the positive mood for the coming days, the medium-term outlook for the pair remains negative. It is supported by almost 70% of analysts. In addition, we should pay attention to the speech of the head of the Fed, Janet Yellen on Thursday, July 13, and data on the US consumer market, which are expected to be published on Friday July 14.
- GBP/USD. Here, unlike the case of EUR/USD, the indicators are divided almost equally. However, both trend indicators and oscillators on D1 show a slight bullish advantage. 65% of analysts also look northwards, supported by graphical analysis. They all point to the level of 1.3050 as a target. The next resistance is 50 points higher at 1.3100. Only 35% of experts side with the bears. However, if we talk about the forecast for the second half of the summer, almost 70% of these experts think that the pair should return to the zone of 1.2500;
- USD/JPY. Recall that the pair has been trying to reach the May maximum at level 1.1435 for more than a month now. And it is possible that this week it will once again attempt to rise to said level and even go beyond it to 1.1500. 60% of experts and most of the indicators agree with this scenario.
The remaining part of the analysts, as well as graphical analysis on H4, believe that the forces of the bulls have already dried up, and the pair is expected to sharply descend to the zone of 111.00-111.75. A third of the oscillators supports this scenario, signaling the pair is overbought.
As for the medium-term perspective, more than 80% of experts expect a fall;
- the last pair of our review is USD/CHF. Here, the opinion of analysts is also radically changing when moving from the weekly forecast to the medium-term forecast. For the next week, 100% (!) of experts speak about the descent of the pair to 0.9520-0.9560. However, once that happens, 60% of them maintain that the pair should rise above the horizon of 0.9800.
A slightly different scenario is offered by graphical analysis on D1: it suggests an initial growth of the pair to 0.9735, and then its fall into the 0.9480-0.9520 zone.
Roman Butko, NordFX