In this week’s Week Ahead Analysis we take a look at the key charts of the week with #USDINDEX, #EURUSD, #GOLD and more!
Watch the video to learn more…
Week Ahead Analysis
This week sees the release of the Non-Farm payrolls number. The forecasts show a potential decrease in the amount of jobs created in September compared to August. A number below 300k could show the demand coming down in labour markets. Investors will be keen to see softer job numbers as this would signal that the Fed could slow the rate of tightening. If the numbers come in above forecasts we could see the Fed remain hawkish and hike by another 75bps in the next meeting.
In central bank news the RBA are forecast to hike rates from 2.35% to 2.85%. The Australian central bank may want to remain hawkish to stay ahead of the Federal Reserve. In recent history these announcements have been met by sellers of the Australian Dollar. The RBNZ will also look to hike rates this week by 50bps which would see their interest rates move to 3.50% up from 3.00%. Similarly to the RBA, the RBNZ may want to give a hawkish view to try and halt further losses against the USD.
The strength meter this week shows us the Euro and USD are the stronger currencies with the NZD and GBP the weakest. Both EURO and USD sit in reversal zones and with the recent pullback in the USD we could see a reversal form for the greenback.
USD Index Analysis
The USD Index formed a bearish close last week after failing to make new highs above 114.50. All investors’ eyes will be on the non-farm payroll data at the end of the week as an indication of what the Fed could do in the future. If the data comes out strong we could see the USD strengthen as the Fed would need to act aggressively. If the price continues to make lower highs and lower lows we could see the price trade to the weekly highs of 110.80.
The EURUSD price has been forming higher highs and lows on the 4hr time frame in line with the USD Index pullback. If this continues we should see a retest of the weekly lows around 0.9900. This could be an area where sellers re-enter the market. If the price begins to form a reversal pattern such as a double top, this could invite sellers to trade back to the lows.
The RBNZ is forecast to hike rates this week by 50bps, this planned event could already be priced into the market. If so, recent history has informed us that this could lead to the currency pair trading lower. The strength meter this week shows the New Zealand Dollar is the weakest currency and could offer short opportunities for traders who favor the risk off markets. A break below the lows 0.5550 could see sellers push the price to the 2020 lows at 0.5475.
The price of Gold benefited from the USD weakness we had in the market recently. The price however is retesting the previous areas of resistance. This could be an area where sellers re-enter the market. A break below the daily candle low could see sellers drive the price back to the recently formed lows at $1620.00.
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