Spring is here, and so is my Pre-Week Market Analysis! Read on to find out my take on the forex market this upcoming week.
Based on my observations, market sentiment and fundamentals seem to be dictating price action.
Last week, Cyprus once again grabbed the limelight. We saw risk aversion play out, sparked by concerns of a potential bank run in the country when they finally re-opened. In the U.S., better-than-expected data supported the dollar while disappointing figures led to sell-offs.
For this week, I think the upcoming interest rate statements will determine the fate of the major currencies. The RBA, BOJ, ECB, and BOE are all scheduled to make their announcements, which will probably create a lot of volatility in the foreign exchange market.
Economic data will also likely cause a fair share of action this week. I’m particularly keeping a close eye on the PMI reports from the U.K. (construction, services, and manufacturing), as their outcomes could weigh heavily on the BOE’s decision on monetary policy. The U.S. non-farm payrolls will garner a lot of attention as well as market participants will want to find out whether recent positive economic data has been sustained.
GBP/USD: Slightly Bullish
On the hourly timeframe of GBP/USD, we see that the SMAs have converged around a previous resistance area for the pair. I’m thinking that if the market tests the area around 1.5160 and support holds, I could go long. But again, that would depend on the results of the U.K. PMI report and the BOE rate statement.
I have a “risk off” trade idea as well. If you look at USD/JPY‘s hourly chart, you’ll notice that it’s starting to form a descending channel. With price below both the 200 and 100 SMA, I think there is a selling bias on USD/JPY.
That’s it for my analysis this week. Let me know whether you agree or disagree in the comments below. Make sure you leave your own opinions as well!