The disappointing March NFP from the U.S. triggered a sharp selloff for USD/CHF, taking the pair below the .9400 significant support level and bottom of the previous range.
It seems that a retest of the support-turned-resistance level could be in play for today or the next few days this week after the pair found support close to the .9300 handle. The .9400 major psychological level is in line with the 38.2% Fibonacci retracement level on the 4-hou time frame.
Stochastic is moving up from the oversold region with a slight bullish divergence in play. This suggests that the pair could recover from its recent losses at least until another round of major reports are released.
Switzerland will be printing its CPI and retail sales data within the week. Inflation is expected to rise by 0.3% in March while consumer spending could post a 2.9% increase, much higher than the previous 1.9% rise. Take note that the FOMC minutes are also set for release this week and this could reaffirm the Fed’s bias against withdrawing stimulus.
Shorting at .9400 with a stop above the 50% or 61.8% Fibonacci levels and a target of new lows would be a good weekly trade.
By Kate Curtis from Trader’s Way
Thanks to weaker than expected U.S. jobs data, GBP/USD breached the 1.5250 minor psychological resistance on Friday and climbed all the way up to the 1.5350 mark. However, price action on Monday reveals that the rally ran out of steam as the pair pulled back during the day.
Currently, GBP/USD seems to be finding support at the former 1.5250 resistance, which is in line with the 38.2% Fibonacci retracement level. At the same time, stochastic has reached the oversold region and is starting to move back up, hinting at a possible rally for today.
U.K. data such as the manufacturing production report and the trade balance could be a catalyst for a rally if the actual figures come in stronger than expected. This would support the BOE’s decision to stay put with monetary policy and would put the U.K. in a better fundamental position compared to the U.S., which has just suffered a slowdown in hiring for March.
If you’re planning to catch the bounce, which has now shown a bit of momentum, make sure to place your stop below the 1.5200 major psychological level as volatility could still spike during the later sessions. Aiming for the 1.5350 previous highs would be good enough for a day trade.
By Kate Curtis from Trader’s Way
AUD/USD seems to have breached the 1.0500 major psychological level already and appears poised to test the next resistance at 1.0600. Take note that this is in line with the top of the long-term range visible on the 4-hour or daily time frames.
Stochastic has already made its way into the overbought region, suggesting that a move down is possible later on. However, the oscillator has yet to turn from the overdone area and show momentum going south, so AUD/USD might still have a bit of room to climb.
Chinese data has been weak so far this week as the CPI failed to meet expectations. The inflation figure clocked in an annual 2.1% reading, lower than the estimate at 2.5% and the previous month’s reading of 3.2%. Chinese PPI also came in worse than expected at -1.9%, hinting at lower inflationary pressures in the coming months. Their trade balance also disappointed as the figure showed a 0.9 billion USD deficit instead of the projected 15.2 billion USD surplus.
If the 1.0600 level holds as resistance, AUD/USD might be on its way back to 1.0200 for the near term. Take note though that U.S. data, such as the FOMC minutes and the retail sales reports, could keep dollar buying at bay.
By Kate Curtis from Trader’s Way
AUD/USD suffered a quick selloff during today’s early Asian session when Australia printed weaker than expected jobs data. The actual report showed a 36.1K drop in hiring, worse than the estimated 6.1K decrease, bringing the jobless rate up from 5.4% to 5.6% for March. The previous month’s figure was revised upwards from 71.5K to 74.0K though.
With that, AUD/USD might have a chance at testing the former resistance level around 1.0475 to 1.0500. This is in line with the 38.2% Fibonacci retracement level on the 1-hour time frame. Stochastic is pointing higher at the moment, suggesting a potential move up.
Take note though that, should the pair rally, the next area of resistance is located at the 1.0600 major psychological level. However, if weak Australian data continue to weigh the pair down for the rest of the trading sessions, a break below the Fib levels could mean AUD/USD is headed back for 1.0200.
By Kate Curtis from Trader’s Way
USD/JPY has been stalling around the 99.50 minor psychological area for the past few days already, suggesting that yen bears may be running out of steam. After all, the pair has climbed by more than 600 pips over the past two trading weeks, which means that a correction could be in the cards.
The U.S. retail sales report due in today’s New York session could be the perfect catalyst for a pullback as the figures could come in weaker than expected, following the dismal NFP figures for the same month. March headline retail sales are expected to show a flat reading while the core version of the report is projected to post a 0.1% decline.
If USD/JPY sells off, it could quickly recover upon reaching the Fibonacci retracement levels, particularly those around the 96.50 to 97.00 former resistance area.
Right now, stochastic is still moving out of the overbought region, hinting at a move down south. Wait for the oscillator to reach the oversold zone and turn upwards before jumping in a long trade if you’re a cautious trader.
By Kate Curtis from Trader’s Way
AUD/USD had a sharp selloff since Thursday last week as weak Chinese data and weak Australian data have been weighing the pair down. The recent release of the weaker than expected Chinese GDP, which came short at 7.7% instead of 8.0%, and the tumble in gold prices to their two-year lows pushed the pair below the 1.0400 major psychological support.
However, a retest might be in the cards as the pair bounced from the 1.0300 handle. It could retrace to the 38.2% Fib, which is in line with 1.0400, before heading back down to test or possibly break its recent lows.
Stochastic is still climbing though, which means bulls have enough energy to push the Aussie back up. For a swing trade, a stop above the Fibs might provide enough leeway and a target of 1.0200 would provide a good reward to risk ratio.
There are no major releases from both Australia and U.S. today so the current risk off market sentiment could keep this pair on a downtrend.
By Kate Curtis from Trader’s Way
A potential reversal is looming on GBP/USD as the pair formed a complex head and shoulders pattern on the 4-hour time frame. The pair is currently testing the neckline around the 1.5250 minor psychological support level.
Take note that this area used to be a resistance level and is currently the 50% Fibonacci retracement level, which means that it could still act as support. However, stochastic is still making its way into the oversold area, suggesting further downside price action.
The catalysts for today are the U.S. existing home sales and BOE MPC member Tucker’s speech. U.S. existing home sales are projected to climb from 4.98M to 5.02M in March, which might be positive for the Greenback. Meanwhile, Tucker could express support for further asset purchases, which could weigh on the pound.
A sell stop order below the 1.5200 major psychological support would be a good level to enter and a target around 1.5000 could yield a reward to risk ratio of 2:1 with a 100-pip stop. The formation is roughly 200 pips in height, which suggests the breakdown could be 200 pips in size as well.
By Kate Curtis from Trader’s Way
The recent risk-off market environment has pushed AUD/USD down from the top of the long-term range around 1.0600 towards the bottom. Another test of the 1.0200 major psychological level could be in the cards for this week.
This level could hold as support if Australia’s quarterly CPI figure meets or beats expectations. The report is slated to show a 0.7% uptick, higher than the previous period’s 0.2% increase in price levels. On top of that, negative expectations for U.S. Q1 2013 GDP could keep the dollar rallies at bay.
Stochastic is already in the oversold zone, suggesting a potential bounce later on. In fact, a shallow bullish divergence seems to be forming as the previous low was matched with a higher low by the oscillator.
Since this is based on the daily time frame, a wide stop of 100 to 150 pips would work for a swing trade. Aiming for the middle of the range around 1.0400 would give a good reward to risk ratio of around 2:1 while going for the top of the range at 1.0600 would yield a much higher R:R.
By Kate Curtis from Trader’s Way
EUR/USD is currently testing the 1.3000 major psychological area, as the path of least resistance is downwards. After all, fundamentals in the euro zone remain very weak as the region grapples with several financial and economic challenges.
Today’s release of the German Ifo business climate report could provide a catalyst for a stronger move down as a lower figure is expected.
The pair could still retrace to the 38.2% Fibonacci retracement level in line with a former support area. With all the negative factors weighing on the euro, a shallow retracement or a sharp breakdown could be likely.
If the pair eventually drops below the 1.3000 handle, a stronger downward trend could ensue and the next support level on the longer-term time frame is around the 1.2750 mark.
By Kate Curtis from Trader’s Way
On its 1-hour time frame, GBP/USD is testing the falling trend line connecting its recent highs from the second week of April. On top of that, the pair is also stalling around the 1.5300 major psychological level.
Perhaps the release of the U.K. GDP report for Q1 2013 will be the biggest market catalyst for today as this could send GBP/USD above the trend line or all the way back down to 1.5000. The report would confirm if the U.K. entered another technical recession for the third time in five years if it comes in negative. Analysts are expecting a 0.1% uptick to follow the 0.3% drop in Q4 2012, but the odds are tilted to the downside as the cold weather in January and March might’ve taken off a huge chunk of growth.
A straddle play could be your setup if you’re not biased in any direction and would just rather catch the overall momentum. The pair could make a strong break below the 1.5300 handle if the report misses expectations or it could rally above the 1.5350 minor psychological resistance if it comes in strong.
This report typically triggers a lot of volatility for the pound, so it make sense to have a wide enough stop of at least 50 pips to give the trade enough breathing room.
By Kate Curtis from Trader’s Way
The U.S. will print its Q1 2013 GDP reading in today’s U.S. session and the report is slated to show 3.0% economic growth for the quarter, higher than the previous reading of 0.4%.
The U.S. dollar has been reacting to fundamentals lately so a strong reading could trigger a rally for the currency while a weak reading might trigger a selloff. USD/JPY seems to be presenting a potential range play for this event.
The pair is currently moving closer to testing the 98.50 minor psychological level on the 1-hour time frame. This level has acted as resistance in the past then as support later on, which means that there are plenty of traders watching this level.
A good U.S. GDP figure could trigger a bounce from 98.50, especially since stochastic is nearing the oversold region, while a weak figure might result in a breakdown back to the recent lows near 97.00.
By Kate Curtis from Trader’s Way
GBP/USD is moving closer to testing the top of the rising channel on the 1-hour time frame, although the pair seems to be retracing at the moment. Weak U.S. data has been propping up this pair so far, and it remains to be seen whether the upward momentum can be sustained.
The U.K. will be printing its PMI figures for services, manufacturing, and construction later on in the week and slight pullbacks are expected for all industries. Traders could start pricing in negative expectations as early as today and these could weigh on the pound.
Take note though that stochastic is in the oversold region, suggesting that pound bulls might take charge soon. If that’s the case, GBP/USD could test the channel resistance around 1.5550 to 1.5650. If that area holds as resistance, GBP/USD could be on its way back down to the 1.5200 mark.
An entry around 1.5600 with a 100-pip stop and a 300-pip profit target would be a 3:1 trade.
By Kate Curtis from Trader’s Way
After last week’s strong selloff, USD/CAD is currently stalling around the 1.0075 resistance turned support level. This is in line with the 50% Fibonacci retracement on the 4-hour time frame.
During the previous release, the Ivey PMI came in much stronger than expected at 61.6. For the month of April, the Ivey PMI is projected to dip to 58.3, reflecting a slight slowdown in the manufacturing industry.
A weaker than expected reading could trigger a bounce from USD/CAD’s current levels back above 1.0100 while another strong reading might push USD/CAD to the next support level near 1.0020. Take not that this is in line with a former resistance area and is the 38.2% Fibonacci level.
Stochastic is pointing down, indicating a potential move south, but the oscillator could turn as USD/CAD finds support at any of the Fib levels. A stop below parity with a target around 1.0100 to 1.0150 would yield a decent reward-to-risk ratio.
By Kate Curtis from Trader’s Way
The RBA just cut interest rates by 25 basis points from 3.00% to 2.75% earlier in today’s Asian session. This pushed AUD/USD below the support level around 1.0230 to a low of 1.0178 right after the statement.
In past rate decisions where the RBA cut interest rates, the pair usually makes a strong break to the downside then makes a small retracement prior to the European session. The pair could still pull up to the 38.2% Fibonacci retracement level before heading any lower in the later trading sessions.
A good entry point could be the 1.0230 mark, which is in line with the 38.2% Fib and the former support level. Stochastic is already heading lower on the 15-minute chart though, which suggests a further move down. After all, European and American traders have yet to react to the surprise rate cut earlier today.
A stop above the highest Fib level or at 1.0300 with a target of 100 pips or more would yield a good reward-to-risk ratio for a day trade.
By Kate Curtis from Trader’s Way
EUR/USD is slowly edging closer and closer to the 1.3000 major psychological support again as the pair has formed lower highs on its 1-hour chart. In fact, it has created a descending triangle pattern on the same time frame.
For now, there are no major reports due from the euro zone, which explains why the pair is currently stuck in a consolidation pattern. The lack of data could keep the pair inside the triangle, with some opportunities to scalp off the top or the bottom of the formation.
Only the medium-tier German industrial production report is due from the region today and this report is projected to print a 0.1% decline, which is a disappointment compared to the previous 0.5% uptick. A weaker than expected reading could push EUR/USD to test the bottom of the descending triangle or even make a breakdown, depending on the actual result.
Stochastic, however, is suggesting a potential bounce back up as it is currently pointing north. Aim for the top of the triangle for a day trade or the previous highs around 1.3100 for a longer-term setup.
By Kate Curtis from Trader’s Way
NZD/USD just broke below the .8500 major psychological support level recently, mostly because of the downturn in risk appetite. The recent speech by RBNZ Governor Graeme Wheeler also revealed that the central bank actually secretly intervened in the currency market last month after NZD/USD topped at around .8675.
The RBNZ’s willingness to intervene could keep the Kiwi’s rallies at bay as traders might be more cautious about another potential intervention. Price did pull up to the 61.8% Fib, which is just below the former support at .8500 when New Zealand printed a strong employment report.
On the 1-hour time frame, stochastic has already reached the overbought region, showing that a selloff could follow soon. If the support turned resistance area continues to hold, NZD/USD could test its former lows just below the .8400 handle.
A stop above the .8500 level and a target at .8400 yields a good reward-to-risk ratio for a day trade.
By Kate Curtis from Trader’s Way
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
