Generalized Forex Forecast for 27 June - 1 July 2016

June 27, 2016

First, a review of last week’s forecast:

– all last week’s forecasts were made with the proviso that they would remain in force only before the beginning of the UK referendum. And given that very proviso, the prediction for EUR/USD may be considered as panned out. The majority of both experts and indicators reckoned that the pair would rise to the area of 1.1340 – 1.1400. The level of 1.1200 was referred to as the main support. Eventually, notwithstanding various expectations as to the outcome of the British plebiscite, the pair could keep within the range of 1.1235 – 1.1420. As to Friday, June 24, that day the pair plunged by 500 points, then it retraced a half of the movement – up to the level of 1.1190 and ended the week at the levels of late May – at the area of 1.1100;

– last week it was virtually impossible to give any holistic forecast for GBP/USD. However, according to the most pessimistic forecasts, if the citizens of the United Kingdom vote to leave the EU, the pair could go down to the mark of 1.1000. However, that didn’t happen, the downswing was impressive – 1790 points just in a few hours. As to the final outcome of the week, the pair stalled at the mark of 1.3675 - the low last seen in early 2009;

– the forecast for USD/JPY reckoned that pair would be moving in a sideways channel of 103.40 – 105.00, and afterwards it would get over a level and move upwards to the zone of 106.00 – 107.50. That’s exactly what happened – during the first half of the week the pair held onto the range of  103.55 – 105.00, on Thursday it went up to the marks of 105.00 –  106.80, and on Friday, having reacted to the outcome of Brexit, it paused at the level of 102.10 (the pivot point of the first half of 2014);

– as to USD/CHF pair, its reaction to the outcome of the referendum appeared to be rather mild – it was up less than 150 points from the last week’s  marks, and it kept within the range predicted by the experts.


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:

– making forecast for EUR/USD, 80% of experts, backed by the vast majority of indicators on Н4 and D1, insist that the pair will once again test the last week’s low, trying to go down to the area of 1.0800 – 1.0900. As to the remaining 20% of analysts, they believe that the pair will follow suit of USD/CHF, which after the ‘Black Thursday’ as of 01/15/2015, gradually returned to initial values. Hence they expect EUR/USD to rise to the marks at the area of 1.1350;

– as to GBP/USD, it’s very difficult to predict its future and in the short term it is likely to react emotionally to any statements of newsmakers in respect of the future of Great Britain and Europe. That is why opinions of the analysts are split almost equally: 40% vote for the pair’s rise, 30% - for its fall and 30% - for a sideways trend. As to the technical analysis, 90% of indicators on Н4 and 100% on D1 point down. However, we’d recommend not to be guided by their readings in the current situation;

– as to the future of USD/JPY, 60% of analysts, backed by 100% of indicators, voted for the pair’s fall at least to the landmark level of 100.00, and may be even further – to the bottom at the zone of 097.00 – 098.00. The remaining 40% of experts and the graphical analysis on Н4 express an alternative point of view, they predict that the pair will move within the range of 101.00 – 104.00;

– as to the last pair of our review – USD/CHF, 70% of experts expect the pair to return to the pivot point of 2015/16 at the level of 0.9800. 85% of indicators on Н4 and 60% on D1 agree to this point of view. With this, the graphical analysis doesn’t rule out that before going north, the pair may drop to the support at 0.9650 – 0.9670. The medium-term forecast for this pair is the same – rise above the level of 1.0000.

Roman Butko, NordFX

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