Start your trading prep with a quick review of last week’s forex action from my buddy Pip Diddy, an overview of catalysts lined up for the major currencies, and the charts to watch this week.
Major Currencies Overview
The dollar was off to a shaky start on the political drama in Washington but recouped most of its losses before the week closed when medium-tier data turned out mostly upbeat.
The spotlight is on the FOMC decision this week since a 0.25% rate hike is widely expected. As with previous hikes, though, these tightening moves could be accompanied by cautious remarks. Read more.
And the biggest loser is… the Loonie! Trade war jitters, NAFTA concerns, and downbeat remarks from Poloz dragged the Canadian currency down for almost the entire week.
So far, it looks like the Loonie has been unable to join crude oil in its pop higher as investors must be pricing in somber expectations for the CPI and retail sales reports due later on. Read more.
EUR & CHF
It was another mixed performance for the shared currency last week while the Swiss franc managed to squeeze out a few gains after the SNB decision turned out to be a dud.
There are no major catalysts on deck for both European currencies this week, which suggests that they could move to the tune of their counterparts instead. Read more.
Sterling was one of the top performers in the previous week, partly due to upbeat forecasts from U.K. Finance Minister Hammond and a show of solidarity from the government in its Brexit stance.
This week, the attention could turn back to U.K. fundamentals with a number of top-tier reports and the BOE decision lined up. Read more.
Last week was all about yen domination as the Japanese currency was buoyed higher by global bond yields and sentiment.
There are no major catalysts from Japan this week, although traders are also paying closer attention to headlines on the political scandal involving PM Abe. Read more.
Aussie bears took over price action in the previous week as bulls retreated on weakening risk appetite. To make things worse, Trump’s tweets on imposing higher tariffs on China also soured the outlook for Australia’s main trade partner.
RBA minutes and the Australian jobs report are due this week and could revive some AUD strength if the results turn out positive. Apart from that, sentiment could still be the biggest driving factor. Read more.
Kiwi bulls were nearly nowhere to be found in the previous week as risk aversion weighed heavily on the higher-yielding currency. On a less downbeat note, the New Zealand dollar was able to edge out its comdoll rivals.
The RBNZ interest rate decision is the main event for the Kiwi this week as traders are eager to find out if any change in policy bias will be made. Read more.
Charts to Watch:
Looking for a pair to trade for the FOMC decision? If you’re hoping to catch a dollar rally on a rate hike, this countertrend play on USD/JPY could be worth watching. Stochastic is slowly crawling higher to signal that bullish pressure is creeping back in and could take price back up to the resistance.
If you’re bearish on the dollar, though, or waiting for a “buy the rumor, sell the news” opportunity during the Fed statement, this EUR/USD triangle support bounce could be a good bet. Stochastic is also indicating oversold conditions and could draw more buyers in once price tests the 1.2200 handle.
Here’s another long-term triangle pattern on a Kiwi pair! NZD/CHF looks prime for a test of the resistance around the .7000 handle and might stay inside the consolidation pattern for another move back to support. Then again, a shift to a less cautious tone by the RBNZ could trigger an upside break.