June 5, 2016
First, a review of last week’s forecast:
- the forecast for EUR/USD reckoned that the pair might first rise to the level of 1.1170, and then – even up to 1.1240, following which it would reverse and start going south. This scenario also considered the fact that according to many authoritative sources the key indicator of economic situation in the USA – Nonfarm payrolls (Nonfarm employment change) – would show its gradual growth. Until Friday the pair had been moving strictly in accordance with this forecast – on Tuesday it reached the first resistance of 1.1173, rebounded, on Wednesday it broke through it, got to the area of the second resistance at 1.1220, following which it reversed and fiercely went south. However, Friday release of data from the USA changed the situation dramatically – actual NFP reading turned out to be 4 times (!) less than it was expected, and thus US dollar plunged by nearly 250 points;
- as to GBP/USD, over the last several weeks the level of 1.4500 was viewed as a medium-term pivot point for this pair. That’s why according to the readings of the graphical analysis the support zone was supposed to coincide with this line. But jitters and heightened volatility ahead of Brexit allowed the pair to drop below it by 115 points. However, afterwards it returned to the above-mentioned pivot point and wrapped up the week at the level of 1.4514;
- a sideways trend with the main resistance at 111.00 and support at 108.50 was deemed to be the most probable scenario for USD/JPY. Similar to EUR/USD, the pair first had been moving virtually within the predetermined range, however, the unexpected NFP data dropped the pair to the month-old values just in several hours;
- the forecast, provided by the graphical analysis for USD/CHF, suggested that it would return to the zone of 0.9700 and it turned out to be absolutely correct, the pair finished the week at the level of 0.9754 – which is 200 points lower than the level it had started from.
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 the future of EUR/USD, 100% of indicators point upwards. However, the vast majority of experts (around 80%) continue to insist that the pair will go down at least to the level of 1.1100. As to the forecast for summer, in their opinion during this period the pair may move further down – to the mark of 1.1000. The graphical analysis gives more cautious forecasts. According to its readings on Н4 and D1, the pair may first go down towards the support of 1.1283 (the next support will be at 1.1200), and then it will surge upwards to the high of 1.1450. Following which it will after all go south getting closer to the local bottom at the level of 1.1130;
- as to the acting of GBP/USD, analysts’ opinions are split almost equally – 45% vote for its fall, 45% - for its rise, and 10% - for the sideways trend. 75% of indicators on D1 along with the graphical analysis also vote for the sideways movement of the pair, which seems to be the most probable for the upcoming week. As before the pivot point is at the level of 1.4500, the support is at the areas of 1.4455, 1.4400, 1.4330, the resistance is at 1.4535, 1.4600 and 1.4740;
- analysts’ views on the future of USD/JPY differ, some predict its rise (50%) and others expect a sideways trend (the other 50%), none of them predicts its fall this week. Of course the pair may reach its May low of 105.50, however, it will be a short-term movement, and its main trend is south-oriented – towards the pivot point of 110.00;
- as for the last pair of our review - USD/CHF, there is a difference of experts’ opinions and the technical analysis once again. 90% of indicators point down, but 60% of analysts predict surge of the pair to the level of 0.9850. The graphical analysis also doesn’t rule out a similar short-term uptick, however, the analysis on Н4 as well as on D1 continues to insist that a deep decline to the support of 0.9500 may follow. As to the medium-term forecast, it also remains the same, in spite of its fluctuations the pair should reach the benchmark level of 1.0000.
Roman Butko, NordFX