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Start your trading prep with a review of last week’s price action and an overview of catalysts coming up.

FX Week Ahead

Take a look at how the majors performed recently and the upcoming catalysts to watch out for:

Major FX Pairs Overview

Major FX Pairs Price Performance from MarketMilk
Major FX Pairs Price Performance from MarketMilk

USD

The Greenback had another rough week as it caved to uncertainties in Fed stimulus and U.S. government efforts to battle the pandemic.

The upcoming NFP release could set a clearer direction for the currency, depending on how leading indicators also due this week turn out. Read more.

CAD

The Loonie moved to the tune of counter currency flows for the most part of the week until upbeat data from Canada gave it a boost later on.

Canada is also due to print its July jobs figures, and another positive turnout could mean more gains for the currency. Read more.

EUR & CHF

Both lower-yielding European currencies were able to take advantage of risk-off flows and dollar weakness throughout the week, although currency intervention remained a threat for the franc.

Another round of mid-tier releases is lined up for these currencies, but market sentiment could stay the key driver of price action. Read more.

GBP

Sterling took the top spot in the previous week thanks to improving COVID-19 updates and mostly upbeat U.K. economic data.

The BOE decision is coming up next and, even though no major changes are eyed, traders would likely be on the lookout for any shift in tone. Read more.

JPY

The safe-haven yen was able to rake in gains from risk aversion early in the week but gave up its winnings and more on currency jawboning later on.

Only a speech by Governor Kuroda and a handful of low-tier reports are on deck, which might leave yen pairs sensitive to sentiment and intervention threats. Read more.

AUD

The Aussie shrugged off downbeat reports and managed to pull off a mixed run in the previous week as it also took advantage of higher gold prices.

The RBA is scheduled to announce its monetary policy decision soon, but no interest rate changes are eyed for now. Read more.

NZD

The Kiwi found itself at the bottom of the forex pile as risk-off flows were in play for the most part of the week.

Quarterly jobs figures are due from New Zealand, along with quarterly inflation expectations data. Apart from that, overall sentiment and counter currency flows could still push the currency around. Read more.

Forex Charts to Watch:

EUR/AUD: 4-hour

EUR/AUD 1-hour Forex Chart
EUR/AUD 4-hour Forex Chart

Reversal alert!

This pair failed in its last two attempts to break below the 1.6000 major psychological mark, creating a double bottom with the neckline around 1.6500.

A break above this resistance could confirm that a reversal is underway, likely taking EUR/AUD higher by at least 500 pips. The 100 SMA just crossed above the 200 SMA to confirm that buyers are taking the upper hand.

Just be careful when jumping in a long position at market, though, as Stochastic is turning lower without even hitting the overbought zone. This suggests that sellers might be eager to return!

EUR/GBP: 4-hour

EUR/GBP 4-hour Forex Chart
EUR/GBP 4-hour Forex Chart

Here’s another potential reversal play for y’all!

EUR/GBP failed in its recent attempts to break above the .9150 minor psychological mark, creating a double top formation on its 4-hour chart.

The pair is on its way to test the neckline at .8950, and a break below support could be followed by a drop that’s the same height as the chart formation.

However, Stochastic is already indicating oversold conditions or exhaustion among sellers while the 100 SMA remains above the 200 SMA to suggest that there’s still a chance for the climb to carry on.

USD/JPY: 4-hour

USD/JPY 1-hour Forex Chart
USD/JPY 1-hour Forex Chart

Not a fan of reversals? If you’d rather go with the flow, then this trend setup on USD/JPY might be worth watching!

The pair has formed lower highs and lower lows to create a descending channel, and it looks like a test of the resistance is about to happen soon.

Using the handy-dandy Fib tool shows that the 50% to 61.8% levels span an area of interest or former support that could hold as resistance. If this is enough to keep gains in check, a move back to the swing low or the channel bottom could follow.

Stochastic is indicating overbought conditions while the 100 SMA is below the 200 SMA, so the odds appear to be in favor of sellers!