The Forex Market Wrap Is Here!
Watch the video to learn what key levels have been hit this week!
Forex Market Wrap Analysis
This week we had some big data releases and 3 central banks speaking. The big news for the week was from the Federal Reserve, the market waited in anticipation for the Fed to announce the start of their tapering programme and there was no surprise. The Fed announced they would reduce their asset purchasing by $15b as expected which saw an initial sell off in the market. However, the data from the US has been positive this week and we saw a rally the day after with the USD index in particular reaching a major swing level.
NFP numbers were largely positive for the US, more than expected figures combined with a drop in unemployment saw the USD rally initially before a sell off after the price rejected the swing level. Last month numbers were also revised to be positive which could suggest the US labor market is strong.
The Bank of England was also in our week ahead analysis this week as rumours were pointed towards the central bank planning to hike rates. We would have seen a hike from the central bank as a shock and if they had it would have caused a rally for the GBP. Instead we saw the BoE hold rates as expected which saw the GBP sell off as the signs of a rate hike faded. Rising Covid cases could have contributed to the Bank of England not making a shock decision.
As we can see from the USD index the price has rejected the major support zone after a strong week. This could be profit taking or sellers could be active here as this was a major resistance level. If the price had climbed above these highs and remained above them the USD bulls could have dominated the market. Instead we have seen a rejection which could lead to some more selling pressure in the short term.
USDCAD was a chart we highlighted in our week ahead analysis for a potential pullback as the USD strengthened and the Canadian Dollar weakened. The market did continue the pullback phase on the weekly time frame which we identified when the lower time frames formed a bullish trend. If the price reaches the 1.2500 level we could see the larger downtrend play out.
The GBPJPY price was highlighted this week for an opportunity as the weekly time frame was in a pullback phase. When the market enters this phase we see a downtrend on a lower time frame. We outlined the potential for this to move back to the 153.00 as this is a strong support for buyers to step in. The price has now reached this level of support which could see the market change trend again.
The EURAUD weekly price closed bullish after the head and shoulders pattern completed. The price has reached the measured move around 1.5400 and now we have seen buyers entering the market. If the price is to rally from here we could see the price move back to the neckline area at 1.5900.
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