As we enter the new week, forex traders should brace for potential market movements driven by a series of significant events across the globe. Here’s a snapshot of what’s in store:

 

 

Forex Week Ahead Analysis

French Elections – Potential Volatility Ahead

The French elections are heading into their second round, with Marine Le Pen vying for a majority. Should Le Pen secure a significant win, we might witness notable volatility in the euro (EUR) pairs. Historically, election outcomes can lead to abrupt market movements, and this week could be no different. Traders should be prepared for possible gaps at the open, especially in pairs involving the euro.

Federal Reserve Chairman Powell's Testimony

Federal Reserve Chairman Jerome Powell is set to testify in Washington this week. With the markets keenly focused on the trajectory of U.S. monetary policy, Powell's remarks will be scrutinized for any hints regarding future rate adjustments or economic outlook. His testimony could significantly influence market sentiment and the direction of the U.S. dollar (USD).

US Inflation Data Release

The U.S. Consumer Price Index (CPI) and Core CPI data are due to be released, providing the first glimpse of inflation trends for the month. Analysts forecast the year-over-year CPI to come in lower at 3.1%. Inflation data is a critical indicator for economic health and policy direction, and any surprises in these figures could lead to substantial forex market reactions, particularly in USD-related pairs.

RBNZ Rate Decision and New Zealand Economic Outlook

In the Pacific, the Reserve Bank of New Zealand (RBNZ) is expected to keep interest rates steady at 5.50%. New Zealand’s economy has shown signs of strain, with unemployment climbing to 4.3%, surpassing pre-COVID levels. Despite this, inflation remains a concern at a high 4%. The RBNZ’s stance and commentary on these economic challenges will be crucial for traders dealing with the New Zealand dollar (NZD).

USD Index

The price on the chart has traded through multiple technical levels and some observations included:

• The USD Index fell last week highlighting weakness in the greenback, this came after a series of poor labor market data releases.
• If market participants continue to sell the USD this week, the price of the USD Index could reach the support of $104.00.

EUR/USD

The price on the chart has traded through multiple technical levels and some observations included:

• EUR/USD was supported last week after a majority for Le Penn diminished in the polls. However, there is still a risk of a majority and a confirmation of this on Sunday could cause gapping on the EUR/USD.
• On the other hand a continuation of current price could see a retest of the key resistance of 1.0860. We could see some short term selling pressure from here.

NZD/USD

The price on the chart has traded through multiple technical levels and some observations included:

• The NZD/USD price could be a mover this week due to the RBNZ rate decision. Price is currently trading at resistance at 0.6145. If the price holds here we could be seeing a move lower towards the minor support zone at 0.6120.
• If the price breaches through the resistance highs the price could trade towards 0.6200.

XAU/USD

The price on the chart has traded through multiple technical levels and some observations included:

• The price of GOLD rallied last week as expected, largely due to the risk elements in the market.
• A consolidation pattern formed last week around $2330.00, this led to a rally in the price. If price continues higher we could see a retest of $2420.00.

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