Major Currencies Overview
The Greenback had a mixed run in the previous week as dollar pairs were pushed around by geopolitical issues and counter currency flows. Still, positive developments between the U.S. and China in trade issues kept the currency supported.
Traders are eager to find out how these updates could influence this week’s FOMC decision as the central bank is still widely expected to cut interest rates again. Read more.
The oil-related Loonie seemed to take its cues mostly from the commodity, as both were off to a strong start early in the week only to give up their gains when the OPEC released weaker demand forecasts.
Canada’s inflation figures and retail sales reports are up for release this week, so the spotlight could turn back to fundamentals. Read more.
EUR & CHF
Euro bulls charged after the ECB delivered a less-dovish-than-expected statement while the franc remained under pressure on improving risk appetite and SNB easing expectations.
The Swiss central bank will be announcing their policy decision this week, and many are counting on even lower deposit rates or more jawboning. Read more.
Sterling soared to the top spot last week, thanks to Brexit plot twists that spurred speculations that a “no deal” scenario might be avoided.
Whether or not the U.K. currency can hold on to its gains might hinge on how this week’s events turn out, as the Supreme Court is due to rule on the prorogation. Oh, and the BOE also has its policy decision scheduled. Read more.
The yen found itself at the very bottom of the forex pile as risk-taking was back in play, and traders seem to be pricing in another round of BOJ easing.
We’ll hear from the Japanese central bank this week and, even though no actual changes are expected for now, market watchers are keen to see if Kuroda will unveil their easing options. Read more.
The Aussie was also one of the top-performers in the previous week as trade tensions between the U.S. and China appear to be fading.
This week’s catalysts for the Australian currency include China’s data dump and the minutes of the latest RBA meeting, which should provide some clues on what the central bank’s next moves might be. Read more.
It was all about mostly weak data and choppy price action for the Kiwi last week, preventing it from taking advantage of the run in risk-taking.
This time, New Zealand’s quarterly GDP could dictate where the currency might be headed, although it could still take some direction from overall sentiment. Read more.
Charts to Watch:
First up is this simple break-and-retest setup on the long-term chart of GBP/CAD. The pair recently fell through support around the 1.6800 handle and has fallen to 1.5875 before pulling back up.
Price has retraced to the 38.2% Fibonacci level but might still be due for a larger correction to the 50% Fib, which is right smack in line with the broken support. Stochastic is on its way up to signal the presence of bullish pressure, but it’s also in the overbought zone to reflect exhaustion.
Here’s another pullback situation on a Loonie pair! EUR/CAD is forming a descending channel on its 4-hour time frame and looks prime for a test of resistance around the 1.4800 mark and 61.8% Fib level.
However, stochastic is already starting to turn lower from the overbought zone to indicate that sellers are about to take over from here. With that, the 50% Fib might be enough to keep gains in check and push EUR/CAD back to the swing low or channel bottom closer to 1.4350.
Ready for another channel? This downtrend one on the daily chart of AUD/USD has been holding for nearly a year already, and it looks like resistance might be tested again.
Price is hovering around the 50% Fibonacci retracement level close to the mid-channel area of interest for now, and stochastic seems to be suggesting that buyers are tired.
Heading back down could confirm that sellers are ready to take over at this point, but a larger pullback to the channel top closer to the .7000 handle might still be possible.