In this week’s Week Ahead Analysis we take a look at the key charts of the week with #EURUSD, #NZDUSD, #USDJPY and more!
Watch this video to learn more…
Week Ahead Analysis
This week may see a return to low volatility due to the lack of US data. Instead the markets will look to other G7 countries for their data this week. On Monday the NZD CPI q/q is expected to show a slowdown from the previous quarter which will highlight the effects of raising rates on inflation.
Later in the week we expect to see CPI data out of the UK and Canada with both sets looking to show further growth. This could be a big problem for the UK as they struggle to hike rates aggressively whilst essentially adding stimulus into the market from the recent GBP fall.
The strength meter this week highlights the USD is the strongest currency followed by the EURO. The NZD is the weakest currency with JPY not too far behind after weakness returned to the haven currency at the end of last week. The USD and NZD are in reversal zones so will be ones to watch closely.
As featured in the previous week ahead analysis video and forex market wrap, the price remains in a short term trading range. On the close of play Friday the price fell back within the consolidation zone showing no signs of a clear break just yet. At this point the price could go either way so a clear close above or below the recent lows will be a strong indication of direction for this forex pair.
The NZDUSD price could continue lower this week if the NZD remains weak and the USD remains strong. This could see the price trade through the lows around 0.5540 and towards the 2020 lows of 0.5475. If however the price were to rally on the open we could expect sellers to be waiting for opportunities short on a lower high. This pair could also reverse according to the strength meter which means that the overall trend of this market may be at an end.
The USDJPY price has recently closed above the 1998 highs at 149.00. Recently the BoJ have intervened to prevent this level from breaching however as of yet this has not happened again. This could be a sign that the price is going to head higher to the 1989 highs of 160.20. The question will be, will the BoJ intervene in the market? If they do, we could see a move that sees price back below the key 145.00.
The price of Gold should remain under pressure as the US economy remains strong. Investors are keen to see the Federal Reserve hike rates by more than 75bps to try and prevent the inflation rate moving aggressively higher. However, at the moment the Fed hasn’t commented on what the next hike will likely be. In recent history the price of Gold has fallen when the Fed has hiked rates, if this continues we should expect this weekly downward trend should continue. The price formed a bearish weekly close suggesting an impulsive phase is forming. If so we should see a downward trend continue on the lower time frames which could offer traders opportunities on rallies.
Did you see our Forex Market Wrap Analysis? You can see it here.
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