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Coronavirus fears popped back in the markets, causing risk-off flows to surge again and weigh on higher-yielding currencies. Here’s a short-term correction play I’m watching.

Currency Snapshot:

Major Forex Pairs Price Performance from MarketMilk
Major Forex Pairs Price Performance from MarketMilk

Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Forex Calendar:

  • Swiss Credit Suisse Economic Expectations index at 9:00 am GMT

What to Watch: NZD/JPY

NZD/JPY 1-hour Forex Chart
NZD/JPY 1-hour Forex Chart

There’s not much in the way of top-tier data for the upcoming London session, so the risk-off sentiment from the Asian session could carry on.

NZD/JPY

The 38.2% Fib just slightly above the 70.00 major psychological handle could be a good area to hop in a short position, as it lines up with a broken support level.

This also happens to be right smack in line with the 100 SMA dynamic inflection point, which is below the slower-moving 200 SMA to confirm that resistance levels are more likely to hold than to break.

Stochastic still has some room to climb before reaching overbought levels, though, so a higher correction to the next Fibs might be possible if European traders are in a risk-on mood.

Not sure where to place your stop and profit targets? Make sure you know about NZD/JPY’s volatility in the last couple of days!