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In this week’s Week Ahead Analysis we take a look at the key charts of the week with #USDJPY, #GBPUSD, #USDCAD and more!
Watch the video to learn more…
Forex Week Ahead Analysis
In the coming week, financial market observers, particularly those invested in the forex market, will be focusing their attention primarily on the United States, where the Federal Reserve is poised to make crucial decisions that could send ripple effects across the globe. As we stand on the precipice of a potentially tumultuous week, several key indicators merit our close scrutiny.
The paramount concern of market analysts and investors alike is the looming decision on the Federal Funds Rate. Current market sentiment forecasts a 70% probability that the Federal Reserve will maintain the rate at its current standing of 5.25%.
Upcoming U.S. economic data releases are expected to show a deceleration in inflation. The Consumer Price Index (CPI) is forecast to edge lower, from 0.4% to 0.2%. The drop in CPI – a key indicator of inflation – could potentially provide more leeway for the Fed to maintain its interest rate policy, reducing inflationary pressures that often warrant rate increases.
Similarly, the U.S. Producer Price Index (PPI) is also predicted to retract, declining from 0.2% to -0.1%. This downtrend indicates easing cost pressures at the wholesale level, which could potentially further temper inflation fears.
Meanwhile, across the Atlantic, the European Central Bank (ECB) is projected to buck the deflationary trend. The ECB is widely expected to increase its interest rates from 3.75% to 4.00%, adding a new twist to the intricate narrative of global monetary policy.
As the week concludes, the focus will shift to the East, where the Bank of Japan will release its Monetary Policy Statement. Although the contents of this report are as yet unknown, the international forex market will be paying close attention, as the decisions and forecasts of one of Asia’s largest economies could have significant implications for the global currency landscape.
USD Index
The price on the chart has traded through multiple technical levels and some observations included:
- Price fell last week back below the previous lows of 103.50.
- If the Federal Reserve leaves rates unchanged, then prices could continue to trade lower.
- However, an increase in interest rates could cause the USD to gain strength.
USDJPY
The price on the chart has traded through multiple technical levels and some observations included:
- Weekly close was a bearish inside candle. These types of patterns can lead to strong breakout moves.
- Poor USD data combined with a rate pause could see price trade back to the key 137.50 support.
- Alternatively, a combination of strong US data and a dovish BoJ could see price trade towards 142.00.
- Last week’s high and low will be areas of interest going into this week.
GBPUSD
The price on the chart has traded through multiple technical levels and some observations included:
- Price found support at the previous level of 1.2350.
- If price remains bullish in line with the weekly trend we could anticipate a move towards the swing highs at 1.2650.
USDCAD
The price on the chart has traded through multiple technical levels and some observations included:
- USDCAD could be one to watch this week as CAD is the strongest currency on the tables.
- However it is in a reversal zone, USDCAD price is at a range low of 1.3300.
- If the price trades through this level we could expect further downside.
- However, a change of trend on the lower time frame could see price trade back to the highs of the range.
Have you watched our interview with USDCAD analysis? You can see it here.
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