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In this week’s Week Ahead Analysis we take a look at the key charts of the week with #USDIndex, #GBPUSD, #USDJPY and more!
Watch the video to learn more…
Week Ahead Analysis
This week the investors will be keeping their eyes on the Non-Farm Payroll reports which are forecast to show a positive labor market in the US once again. The employment change is expected to rise by another 400k+ with average hourly earnings also expected to rise with unemployment forecasting a decrease. A positive NFP report this week will likely see the Federal Reserve tighten monetary policy further by 50bps in the next meeting.
The strength meter this week’s highlights a number of currencies at extremes. The AUD and NZD are both at extreme highs with the NZD this time the one showing reversal potential. The GBP and JPY are at extreme lows with the GBP looking the most likely to reverse currently.
USD Index
The price of the USD index this week could fluctuate as we have a strong USD fundamentally but technically there are signs of a reversal. Firstly fundamentally the inflation rate in the US is high and looks to continue despite recent actions from the Fed. This could keep the USD bullish until the NFP numbers. The NFP numbers could show us the Fed will need to make a more aggressive jump in rates and could lead to a reversal. Technically the price is at key highs and the relative strength index (RSI) is showing clear bearish divergence as the price made new highs but the indicator made lower highs. This could mean that the recent rally we have seen in the market isn’t as strong as it looks. A break in the 4hr trend could be an early indication of a reversal in the market and will be the one to watch.
GBPUSD
The GBPUSD price remains on our watchlist this week despite the market failing to remain above the key 1.3200 level. The strength meter shows an increase in the GBP which could lead to a reversal again on the GBPUSD price. The close below the 1.3200 could shake a few traders out in the short term which could see the price reject demand zones. A break above 1.32000 will invite further buyers into the market and we could start to see the rally form.
USDJPY & US10YR
The correlation between the USDJPY price and the US10YR Yields is strong, we can see that clearly with the recent moves in both markets. The Bonds market retested the key 1.7% highs and began to rally which led to the USDJPY price breaking through the highs and rallying further. This could continue in the near term as the US10YR is approaching a major resistance. If however the resistance is met with sellers we could then look for reversal opportunities on USDJPY.
GBPNZD
The GBPNZD price is one to watch this week from the strength meter. The strength meter shows us that the two currencies are moving towards each other which could create a reversal in the current trend. Looking at the chart we can see that the market is in a strong downward trend approaching the key major swing lows. If the price reacts here and we see a break in the 4hr consolidation we could look for reversals trading opportunities.
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