In this week’s Week Ahead Analysis we take a look at the key charts of the week with #USDINDEX, #NZDUSD, #CADJPY and more!
Watch the video to learn more…
Week Ahead Analysis
This week investors will turn their attention to two rate decisions, one from the RBA and one from the BoC. The RBA is set to announce a rate hike 25 bps to see rates move from 2.85% to 3.1%. The Bank of Canada is also set to announce a 25 bps hike which will see their rates move from 3.75% to 4.00%.
In the US investors will be keeping a keen eye on the Core PPI and PPI data as this is a leading indicator of consumer inflation. This is forecast to come in higher or unchanged this week. A higher reading could see the USD strengthen.
The strength meter continues to show the NZD is the strongest currency but at the top of the reversal zone at +7. This means the currency is really strong but could be vulnerable to some sharp weakness. The USD was the weakest currency last week at -6 but now the currency has moved higher to -5. The Canadian Dollar has joined the USD as one of the weakest currencies.
US Dollar Index Analysis
The USD Index highlights the weakness in the USD as price has traded through the 105.00 handle. The next stop for price will be the lows of 103.50. If the price traded to this support we could expect a short term reversal to form here.
The NZDUSD price continues to trade higher and it could continue further this week if the USD weakness remains. The USD is one of the weakest currencies and the NZD is one of the strongest according to the strength meter. The price is however coming into a key level of resistance at 0.6450. This strong level of resistance could offer a short term opportunity for a reversal if price action forms a bearish reaction.
The price of CADJPY has traded through multiple levels of support as the Canadian Dollar continued to weaken. The price is trading towards the lows of 98.25, on the way to this level we could see the price pullback to previous lows such as the 102.00 handle where the price has found support in the past. If bearish price action of a lower highs forms at the 102.00 we could look for short ideas down the next support.
The price of the largest US stock market has rallied recently due to the less hawkish tone from the Federal Reserve. This price of the stock market could continue higher again this week if the US data fails to move higher. A negative PPI announcement would provide the Fed with more ammunition to lower the pace of rates. If however the PPI figures come in higher we could see the USD begin to strengthen and the stocks will likely break through the bullish channel support.
Did you see our Forex Market Wrap Analysis? You can see it here.
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