In this week’s Week Ahead Analysis we take a look at the key charts of the week with #USDINDEX, #GBPUSD, #GBPJPY and more!
Watch the video to learn more…
Week Ahead Analysis
This week investors will be focused on the US FOMC meeting minutes and Non-Farm Payrolls. In the FOMC meeting minutes, investors will be keen to see if there are any further details on monetary policy. Previously the Federal Reserve announced they will slow the pace of tightening but will hike for longer. This was seen as a negative move by investors and the USD weakened. Will this recent USD weakness remain this week? Before the FOMC meeting minutes, the market will announce Manufacturing PMI which is forecasted to be lower than previous showing further contraction. The Non-Farm Payroll forecasts do not look much better with Jobs expected to fall from 265k to 200k. Followed by Average Hourly Earnings forecasted to come in lower from 0.6% to 0.4%.
The Strength Meter shows that JPY is the strongest currency with the GBP and USD being the weakest. The JPY, GBP, and USD are all in reversal areas so the trends on these currencies could be coming to an end.
The USD Index price remains above 103.50 despite the recent run of poor data. However, the low volume of holiday trading could be the reason behind the lack of breakdown. When volumes return this week the poor US data could drive the price below 103.50 and to the trendline support which rests above 101.50.
On the strength meter, the GBP has been weakening and is now at the same point as the USD. This is why we have been seeing this market range between the key levels of 1.2125 and 1.2000. If the USD weakens this week we could expect the GBPUSD price to trade back above the 1.2125 level of resistance. If not and the price remains in a range unless it can break below the 1.2000 level.
The price of USDJPY has formed a strong downward trend on the daily time frame recently after reaching a high of 151.00. The strength meter tells us that the USD is weak and the JPY is strong so we could see the downward trend continue through the support. The price is currently trading at 131.00 support, a break below this level could offer opportunities to see the price trade down to 126.50.
Looking at another strong against weak currency pair GBPJPY could continue lower. The weekly bearish close suggests we could see the market move down to the next level of support which sits at 157.00. This level has multiple confluences and if this is traded through then the price could move towards the September low of 149.00.
Have you watched our Forex Market Wrap analysis? You can see it here.