After several failed attempts in the past few months, AUD/USD finally made a convincing break below the 1.0200 major psychological level in yesterday’s trading.
The recent RBA interest rate cut may have been one of the major factors driving the selloff, although the pair did draw a bit of support from strong Australian jobs data released this week. However, the rally didn’t last and AUD/USD soon found itself below 1.0200 and even 1.0100 in today’s Asian session.
This could be a signal that a longer-term downtrend is set to take place for AUD/USD. Remember that the previous range was roughly 400 pips in height as the pair found resistance at 1.0600 and support at 1.0200 in the past. This suggests that the breakdown could be of the same height, taking the pair below parity later on.
By Kate Curtis from Trader’s Way
GBP/USD had a strong selloff towards the end of the previous week when the U.S. Federal Reserve talked about their concrete plans to exit from their ongoing open-ended asset purchase program. However, the pair has found support at the bottom of the rising channel on the 4-hour time frame.
This channel support could be a key area for the week, as it is in line with the 1.5350 minor psychological support level. A breakdown from this area would confirm the start of a downtrend for GBP/USD.
On the other hand, a bounce from this area, which could be triggered by a strong UK claimant count change release or upbeat remarks from BOE Governor King midweek, could push GBP/USD back to the top of the channel around 1.5600.
By Kate Curtis fromTrader’s Way
NZD/USD suffered a sharp selloff last week when RBNZ head Graeme Wheeler admitted intervening in the forex market. This was followed by the Fed’s release of their plans to exit monetary policy easing by gradually reducing their bond purchases, triggering a sharp dollar rally.
The drop has taken NZD/USD below the .8400 major psychological level, which has acted as strong support in the past. A potential retracement might still take place this week if New Zealand data provides enough support for the Kiwi.
Earlier today, the New Zealand quarterly retail sales report came in slightly weaker than expected, with the headline figure posting a 0.5% increase instead of the estimated 0.9% rise and the core figure showing a mere 0.6% uptick, lower than the previous 1.2% increase.
If NZD/USD’s rally does have legs or if a major correction will take place, the pair could find resistance at the 38.2% Fib, which is in line with previous support level. A stop above the .8400 mark would yield a good reward-to-risk ratio if the target is around the previous lows near .8250.
By Kate Curtis from Trader’s Way
Following a successful break of the double top neckline on the daily time frame, EUR/USD appears poised to test the neckline of the larger head and shoulders formation, which can be seen on both the weekly and daily charts.
Euro zone GDP figures are set for release today and France’s Q1 2013 GDP figure has already come in below expectations, printing a 0.2% decline. Germany, on the other hand, is projected to show a 0.3% rebound over the 0.6% contraction in Q4 2012. However, if the entire region ends up with another negative figure for the quarter, it would mark the euro zone’s sixth quarter in recession.
If that’s the case, EUR/USD could continue to sell off until the next visible support level near 1.2750. Should that level still break, it would confirm the head and shoulders downtrend signal, with the pair slated to make a same drop that’s the same height as the formation.
By Kate Curtis from Trader’s Way
USD/JPY seems to have stalled right below the 103.00 major psychological resistance level as the pair retreated upon reaching a high of 102.78. There could be a chance to hop in the overall uptrend as the pair is currently finding support at the Fibonacci retracement levels.
Take note that the 50% Fibonacci retracement level is in line with the 102.00 major psychological support, which used to act as resistance in the past. The pair already seems to have bounced off this area and is showing upward momentum, although stochastic hasn’t reached the oversold region yet.
If there’s room for a larger correction, USD/JPY can still pull back down to the 61.8% Fib before resuming its uptrend. But if you think that the pair is headed north from here, you can just opt to set your stop below the lowest Fib and go long at market. Aiming for the recent highs or the 103.00 mark could yield a good reward-to-risk for the day.
The risks for the remaining sessions are the U.S. data releases, namely the CPI, building permits and housing starts, as well as the Philly Fed index. Note that U.S. data has been weak yesterday and has weighed on the U.S. dollar.
By Kate Curtis from Trader’s Way
GBP/USD already broke below the rising trend line on the 4-hour time frame earlier this week, but it appears that the pair has found support around the 1.5200 major psychological level for now.
This was spurred by an upgrade in growth and inflation forecasts by the BOE, as well as stronger than expected jobs data from the United Kingdom. The economy’s jobless rate fell from 7.9% to 7.8% in April, as there were fewer individuals filing for unemployment claims in the month.
Weak U.S. data, namely inflation reports and manufacturing indices, also contributed to GBP/USD’s recent rally. However, the climb could last only until the Fibonacci retracement levels. Note that the 1.5400 major psychological resistance is between the 50% and 61.8% Fibonacci levels.
The broken trend line is also within this range, which suggests that it could act as strong resistance moving forward. Stochastic has yet to reach the overbought region so wait for a crossover and a move down before shorting.
By Kate Curtis from Trader’s Way
Ever since AUD/USD breached the 1.0200 major psychological level, it has been on a very strong selloff, even breaking below parity. The trend remains very bearish for the pair and there could be shallow retracements for the week.
On the 1-hour time frame, there’s a falling trend line connecting the pair’s recent highs. Using the Fibonacci retracement tool shows that the 38.2% Fibonacci retracement level is close to the .9800 major psychological level. This level has acted as support last week and could act as resistance from now on.
Stochastic is still moving up, which suggests that the pair could still pull up to the 61.8% Fibonacci level, which is closer to the falling trend line. Set your stops above this area or the .9850 minor resistance if you’re shorting.
The only major release from Australia this week is the RBA monetary policy meeting minutes. The U.S. dollar could continue to draw support from talks that the Fed is already mapping out plans to exit its bond purchases.
By Kate Curtis from Trader’s Way
The dollar seems to have retreated from its rallies at the start of this week, as traders may have booked profits off key inflection points for the major pairs. USD/CAD, in particular, has found resistance at the 1.0300 major psychological level.
From there, the pair has pulled back to the rising trend line on the 1-hour time frame. Stochastic, however, is making its way out of the oversold region. This suggests that the pair’s rallies could resume soon if sentiment for the dollar remains bullish.
The pair could test its former highs around the 1.0300 area and even make a strong break to the upside later on this week, depending on the outcome of the FOMC meeting minutes release and Fed head Bernanke’s testimony. Indications that the Fed is really considering reducing its bond purchases as early as June could trigger another strong dollar rally.
By Kate Curtis from Trader’s Way
EUR/USD seems to be rebounding from its recent lows nicely as the pair is edged back abve the 1.2900 major psychological level. It’s just a few more pips away from the 38.2% Fibonacci retracement level, which could also act as resistance should the pair keep climbing in today’s trading sessions.
There are a bunch of market catalysts on tap, starting with the euro zone current account release and the German bond auction. Should these events turn out better than expected, EUR/USD could stay supported for the rest of the London session.
During the US session, the existing home sales report and FOMC meeting minutes will be printed. Around the same time, Fed Chairman Ben Bernanke is set to give a speech and possibly drop some hints on the Fed’s stimulus exit plan. In his previous speeches, Bernanke seems to be in no rush to withdraw quantitative easing and if he does highlight this bias in today’s testimony, the U.S. dollar could continue to sell off.
However, if the FOMC minutes show that majority of Fed officials support the tapering off of asset purchases as early as June, the dollar could regain ground.
Further dollar selling could take the pair up to the 1.3000 major psychological area, which is close to the 50% Fib and a former support level.
By Kate Curtis from Trader’s Way
The recent correction in GBP/USD is giving pound bears a chance to hop in the ongoing selloff at a better price. The pair rebounded off its recent lows and appears to be making a pullback to any of the Fibonacci retracement levels.
The falling trend line on the hourly time frame is still intact as the 61.8% Fibonacci retracement is in line with the former support level around 1.5175. Stochastic is pointing upwards, suggesting that the pair could head further north before resuming its drop.
If you’re planning on shorting this pair, set your stop above the trend line or the 1.5200 major psychological level. If the pair resumes its selloff, it could test its previous lows around the 1.5050 minor psychological support and possibly go for new lows closer to the 1.5000 handle.
By Kate Curtis from Trader’s Way
After that strong rally that lasted for nearly a couple of months and more than a thousand pips, USD/JPY seems to be in the mood for a major correction.
On the 4-hour time frame, the pair is pulling back to the 99.50 to 100.00 area, which acted as resistance in the past. This is in line with the 61.8% to 50% Fibonacci retracement levels, which could act as support from now on.
Stochastic is already in the oversold region, suggesting that USD/JPY could rebound soon. The oscillator has also made a bullish divergence from the lows at the start of May.
The BOJ has made no changes to their current monetary policy scheme while the Fed has expressed intention to scale down their bond purchases within the year. This should keep USD/JPY supported in the near term.
By Kate Curtis fromTrader’s Way
AUD/USD is once more sitting at a key inflection point, which has been an established support level on longer-term time frames. There is no report scheduled for release from Australia today, as this pair could be driven by U.S. data and market sentiment.
Gold prices have been dropping lately, and this doesn’t bode well for the Australian dollar. In addition, the U.S. will be printing its CB consumer confidence figure and is expected to show a huge increase in consumer optimism. The figure is slated to rise from 68.1 to 70.7 this month, following better than expected consumer sentiment data from the University of Michigan.
This might be enough to trigger strong dollar buying that could push AUD/USD below the .9600 handle. The last time it broke below a key support level (1.0200), it plummeted by 600 pips.
By Kate Curtis from Trader’s Way
USD/CAD’s uptrend is still very strong as the rising channel on its shorter-term time frame is still holding. The pair recently found support at the bottom, which is near 1.0350, and bounced right back up when the U.S. printed strong consumer confidence data yesterday.
The pair could be on its way to test the top of the rising channel, which is near the 1.0450 minor resistance level. Stochastic has already reached the overbought area, which means that sellers could take control of price action soon.
Take note that the BOC interest rate decision is scheduled today, and this event could provide enough volatility for USD/CAD. Downbeat remarks from BOC Governor Carney could trigger a quick Loonie selloff, but this might not last as he is set to step down from office soon.
By Kate Curtis from Trader’s Way
USD/CAD is one of the best currency pairs to trade in a ranging market environment. The pair is currently moving sideways on its 1-hour time frame, as it found support around 1.0300 and resistance near 1.0400.
The pair gapped up over the weekend, but the gap has already been filled. Stochastic is still climbing, which shows that there’s still enough buying pressure to trigger a test of 1.0400.
Set a stop beyond the pair’s previous highs to give the trade enough breathing room. Aiming for the 1.0300 bottom of the range could still be a 2:1 trade with a 50-pip stop.
The U.S. ISM manufacturing PMI is the only red flag for this pair today, and the report is expected to tick lower from 50.7 to 50.6.
By Kate Curtis from Trader’s Way
The uptrend of CAD/JPY still seems to be intact as the pair is testing the bottom of the ascending channel on the 4-hour time frame. This area is also around the 96.00 major psychological support.
Stochastic has just moved out of the oversold region and is moving up, suggesting that Canadian dollar bulls are in control for now. If that’s the case, they could push CAD/JPY back to the top of the channel or at least midway around 100.00.
Canada will be printing its building permits report in today’s U.S. session and is awaiting a speech by new Bank of Canada Governor Poloz tomorrow. Around that time, Canada will also print its Ivey PMI figure and possibly show an improvement from 52.2 to 55.3. On Friday, Canada will release its jobs report. There are no major reports due from Japan for the rest of the week.
Setting a stop below the 95.00 handle with a target of 100.00 would be close to a 3:1 reward-to-risk ratio.
By Kate Curtis from Trader’s Way
On its shorter-term time frame, USD/CAD has been consolidating, as though getting ready for a break in either direction. With today’s set of data from Canada, a strong breakout could be in the works.
Canada is set to release its CPI and retail sales data in today’s U.S. session. CPI is expected to be up by 0.4% while core CPI could show a 0.3% uptick. Retail sales are projected to climb by 0.2% while core retail sales could stay flat. Stronger than expected data from both reports could trigger a downside breakout while significantly weak figures could set off an upside break above 1.0400.
A bearish divergence has formed on the 1-hour time frame, hinting that a downside breakout could be more likely. A short order below consolidation and a stop above 1.0400 would yield a good reward-to-risk for an event play.
[I]By Kate Curtis from Trader’s Way[/I]
After breaking above the falling trend line on its 1-hour and 4-hour time frames, USD/CHF has made another signal that a reversal could take place.
On its 4-hour time frame, the pair has made an inverse head and shoulders pattern, indicating that the previous downtrend is about to turn. If the pair makes an upside breakout above the neckline around the .9400 major psychological level, an uptrend could be confirmed.
However, stochastic is in the overbought region, suggesting a potential selloff. The oscillator hasn’t crossed down though, which means that dollar bulls are in control for now.
By Kate Curtis from Trader’s Way
GBP/JPY is on a short-term downtrend based on its 1-hour time frame. The pair has made lower lows and lower highs, forming a falling channel.
At the moment, GBP/JPY is in the middle of the channel on its way down. Stochastic is moving lower, although it has already reached the oversold area. It hasn’t crossed yet though, which means that pound bears are still in control. The pair could still make its way to the bottom of the channel before bouncing back up.
The market events for the UK today are the BOE financial stability report and the government spending review. Public sector borrowing has improved in the UK recently, which could suggest that we’d hear upbeat comments from both the central bank and the government. If that’s the case, GBP/JPY could find its way back up sooner or later.
By Kate Curtis from Trader’s Way
There’s a potential short-term retracement on EUR/USD’s 1-hour time frame which could come into play today. There’s a falling trend line connecting the pair’s recent highs while the 50% Fib is in line with a former support around the 1.3070 area.
A few medium-tier euro zone reports are on tap for today, the biggest of which is the German unemployment change report. After posting a 21K increase in joblessness for April, only a 7K rise is expected this time. A higher than expected figure would mean that the jobs sector is still unstable in euro zone’s largest economy, which could be bearish on the euro.
As for the US, the core PCE price index and personal spending and income reports are due. The price index could show a small improvement in inflation while personal spending is expected to be up. If that’s the case, the dollar could draw support from good data.
A stop above the 1.3100 major psychological level would yield a good reward-to-risk when shorting this pair.
By Kate Curtis from Trader’s Way
GBP/USD is still on a steady downtrend on its 1-hour time frame, as the pair is moving below a falling trend line connecting its recent highs for the month.
The pair appears to have bounced off the 1.5200 major psychological support, but this might just mean that a correction is in the works. If that’s the case, the pair could pull up to the Fib levels which are in line with the trend line.
In addition, the 50% Fib seems to be in line with a former support area, which could act as resistance from now on. Stochastic is still climbing, suggesting that there’s enough upward momentum to push for a retracement.
Shorting around the 1.5300 area with a tight stop and a target of 1.5200 would yield a good reward-to-risk ratio for a day trade.
By Kate Curtis from Trader’s Way
