First, a review of last week’s forecast:
- EUR/USD. 65% of people thought the dollar would strengthen and the pair would fall. Starting from Monday, the pair obediently went to the target indicated by experts, namely 1.2300. However, a little before reaching the set level of 1.2335, the bears lost all their advantage, and, after two unsuccessful attempts to break through this support, the pair turned north.
The autumn 2014 level of 1.2535 was identified as the nearest resistance on its way up: the pair climbed to it on the first day of February.
On 2 February, thanks to positive data on the US labour market (NFP grew by 25%), the dollar managed to play back a few of its losses, meaning that the pair completed the five-day period almost in the same place where it started: near 1.2455;
- GBP/USD. Analysts' views about the future of this pair were divided into three equal parts: one third were for the growth of the pair, a third were for its fall, and another third foresaw a sideways trend. Such a distribution of votes gave grounds to expect the pair to move east, which was confirmed by graphical analysis on H4 and D1. The forecast was fully vindicated, and by the end of the week’s session the pair returned to its initial values at 1.4115;
- The forecast of USD/JPY can also be considered fulfilled if not by 100, then, at least, by 90 percent. Most experts, supported by graphical analysis, expected the pair to go up to 109.35, and then further up, to around 111.00, which is where the Pivot Point of the 108.00-114.75 medium-term channel is .
If you look at the chart, you can see that during the first half of the week the pair had been trying to overcome the resistance at 109.20, succeeding in doing so on Wednesday 31 January. The pair reached the week’s maximum of 110.47 on Friday;
- USD/CHF. Here, the opinions of experts were divided 50/50. The pair spent the whole week being similarly ambivalent: at first it grew a little, then fell slightly, then went up again, and then fell a little. As a result, the decline over five trading days was as small as 25 points (0.9335).
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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. The absolute majority of trend indicators and oscillators are still coloured green. Only two oscillators signal that the pair is overbought, one of them being on H4 and the other on D1. As for analysts, there is not even a hint of unity among them: 35% think the pair will grow, 35% think it will fall, and 30% are simply disorientated.
A clearer picture is drawn by graphical analysis. On H4, it assumes a continuation of the uptrend, with the support being near 1.2400 and the nearest targets being 1.2525 and 1.2570. On D1, graphical analysis also largely focuses on support / resistance levels of autumn 2014. The trend is also an upwards one, with support at 1.2340, and a 1.2630 target.
If we move to the medium-term forecast, almost 70% of experts still hope for dollar strengthening and the pair’s subsequent decline to 1.1900-1.2085;
- GBP/USD. Experts opinion is divided thus: 55% predict growth, 45% foresee a fall. The indicators are mostly directed to the north. Only 15% of trend indicators and 30% of H4 oscillators are painted red. When moving on to D1, however, almost all of them change colour to green as well.
Graphical analysis indicates a possible fall of the pair to 1.3950, after which it should grow to the resistance at 1.4275 and then to the peaks of 1.4345 and 1.4515.
It should be noted that on Thursday 8 February the Bank of England is expected to release quite a few announcements, although no major changes to UK monetary policy are anticipated.
In the medium term, just as in the case of EUR/USD, the number of analysts expecting the dollar to grow and the pair to fall to 1.3285-1.3600 increases to 70%;
- USD/JPY. If last week most experts, supported by graphical analysis on H4 and D1, rightly expected the pair to rebound, now some of them have moved to the side of the bears. As a result, the situation is as follows:
55% of experts, supported by graphical analysis on H4 and D1, as well as half of trend indicators and oscillators on D1, believe that the pair should once again test the lower level of the mid-term side corridor of 108.00. As for the remaining bull supporters, in their opinion, the pair's growth potential has not yet been exhausted, and it should rise to 111.25-112.00;
- The last pair of our review is USD/CHF. Almost 70% of experts, in full agreement with graphical analysis on H4 and a quarter of indicators, expect the pair to go up first to 0.9575, and then 75 points higher to 0.9650. The remaining 30% of analysts are confident that the downtrend will continue and that the pair will fall into the 0.9100-0.9200 zone.
Roman Butko, NordFX
Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.