Fawad Razaqzada
TradingCandles.com
The FX markets have been fairly quiet so far this week and price action on the whole has been range bound. Indeed, after last week’s rally, safe haven Japanese yen pairs have all pulled back a little at the start of this week, despite the fact global equity indices have marched on higher. Thus, if we are to see the re-emergence of a trend in FX, it will likely be in yen pairs pushing higher along with stocks. With the likes of the USD/JPY, EUR/JPY, AUD/JPY and CAD/JPY all pushing higher for 3 consecutive weeks, I wouldn’t be surprised if any of these pairs were to turn around now and push higher again.
Among the yen pairs, the EUR/JPY will be a good one to watch for further developments this week, ahead of the Eurozone PMI data on Thursday. Technically, this pair looks somewhat bullish after it broke above its short term bear trend and resistance around 125.45 to 125.70 last week, before stalling at 126.80. The 125.45-125.70 range is now the key support area that needs to be defended to keep the bullish trend intact. Meanwhile, any move above the 126.80 level is likely to trigger further technical buying, initially towards the 200-day moving average (127.32) or the long-term 61.8% Fibonacci retracement level (127.65).
Figure 1:
Source: TradingView and FOREX.com.
Trading leveraged products such as FX, CFDs and Spread Bets carry a high level of risk which means you could lose your capital and is therefore not suitable for all investors. All of this website’s contents and information provided by Fawad Razaqzada elsewhere, such as on telegram and other social channels, including news, opinions, market analyses, trade ideas, trade signals or other information are solely provided as general market commentary and do not constitute a recommendation or investment advice. Please ensure you fully understand the risks involved by reading our disclaimer, terms and policies.
Recommended Content
Editors’ Picks
AUD/USD holds hot Australian CPI-led gains above 0.6500
AUD/USD consolidates hot Australian CPI data-led strong gains above 0.6500 in early Europe on Wednesday. The Australian CPI rose 1% in QoQ in Q1 against the 0.8% forecast, providing extra legs to the Australian Dollar upside.
USD/JPY sticks to 34-year high near 154.90 as intervention risks loom
USD/JPY is sitting at a multi-decade high of 154.88 reached on Tuesday. Traders refrain from placing fresh bets on the pair as Japan's FX intervention risks loom. Broad US Dollar weakness also caps the upside in the major. US Durable Goods data are next on tap.
Gold price struggles to lure buyers amid positive risk tone, reduced Fed rate cut bets
Gold price lacks follow-through buying and is influenced by a combination of diverging forces. Easing geopolitical tensions continue to undermine demand for the safe-haven precious metal. Tuesday’s dismal US PMIs weigh on the USD and lend support ahead of the key US macro data.
Crypto community reacts as BRICS considers launching stablecoin for international trade settlement
BRICS is intensifying efforts to reduce its reliance on the US dollar after plans for its stablecoin effort surfaced online on Tuesday. Most people expect the stablecoin to be backed by gold, considering BRICS nations have been accumulating large holdings of the commodity.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Fed might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.