Big volatility potential for the crosses with interest rate decisions coming from three major central banks, making AUD/CAD and EUR/AUD pairs to keep a close eye on for this week.
Both the Reserve Bank of Australia and Bank of Canada are coming in hot with their latest monetary policy decisions and economic outlooks, so naturally we’ve gotta throw AUD/CAD on the watchlist this week.
From a price action standpoint, the pair has been some what channeling lower since the end of January, and after finding buying support at the bottom of the channel late February around 0.9300, it’s now already back to the top of the channel. This area also coincides with a major area of interest (0.9450), that formed a broken-support-turned-resistance pattern last month.
We’ll have to wait and see what happens here with the top tier data coming up, but whatever comes there are setups for both the bulls and bears to checkout, whether it’s an upside channel break or channel continuation lower. But from a pure price action standpoint, odds are for the trend lower to continue, especially as the stochastic signals potentially overbought conditions in the short-term.
Besides the RBA and BOC, the European Central Bank has an interest rate decision coming as well, which ups the odds that we’ll see action in EUR/AUD this week as well.
This year so far, EUR/AUD has created a solid range between 1.5750 – up to 1.6050, and with the pair already testing the top of the range and holding, the range pattern looks to continue with prices already moving back below the 1.6000 major psychological level.
With a daily ATR of around 120 pips and two central bank decisions coming soon, it’s really shouldn’t be too hard for EUR/AUD to make its way lower this week and retest the bottom of the range…that’s if the economic catalysts will cooperate to push the pair there.
Last but not least, we’ve got NZD/JPY for those who are trying to avoid news catalysts. There are no schedule top tier events for either currency this week, which likely gives technicals a little bit more weight with traders when making their moves on this pair.
NZD/JPY has been in a slow but solid uptrend since dropping below the major psychological level of 70.00 at the beginning of the year, now testing the 76.00 area this week. The bulls have run into big roadblock, though, with 76.50 not willing to break , which is not surprising given this area was a major support area back in Q4 2018.
If the pair does break higher and holds above 76.50, traders could start piling into this pair to play the recent broad risk-on sentiment environment, possibly for that sweet interest rate carry difference of around 1.85%, or likely just because the trend is always our friend, right?