EUR/USD, GBP/USD during Support While USD/JPY Pulls Back

Talking Points:

– Next week presents a comparatively light information calendar, and this can be an well-suited time for cost movement to uncover that trends might have delay intensity or that themes might sojourn active in a entrance weeks.

– Below, we demeanour during stream support display in EUR/USD and GBP/USD; and we demeanour during a array of levels in USD/JPY that can be employed for a idea of bullish trend continuation.

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The past few weeks have brought a substantial series of drivers to a ravel for Forex markets. One of a unifying themes from this new risk cost has been a fact that few Central Banks wish to see strength in their currency. The European Central Bank has attempted to speak down a awaiting of QE-taper, as has a Bank of Japan; and yesterday we saw a really dovish Bank of England try to do a same. Meanwhile, a Federal Reserve stays steadfastly hawkish, though markets seem to not caring or be changed by a awaiting of faster rate hikes in a residue of this year as a U.S. Dollar continues to collapse nearby intermediate-term support.

Next week brings a light information calendar; and even Fed-speak is comparatively light as we usually hear from Charlie Evans, Patrick Harker, James Bullard and Loretta Mester. Not on a list are a vital marketplace movers of Janet Yellen, Stanley Fischer, William Dudley or John Williams. And given a activity from a before few weeks, this comparatively light week of drivers can be an well-suited time for trends to confirm; highlighting that themes might be a many active for traders to follow in a entrance weeks. Below, we demeanour during 3 of a some-more engaging cost movement themes to come into doubt for subsequent week.

Tug of War during Support in EUR/USD – Who Will Win?

Probably one of a some-more startling factors for 2017 cost movement has been strength in a Euro. While a ECB has done no pledges towards finale their out-sized QE program, markets have begun to fear a inevitable; that is a tapering of a bank’s impulse module as European information continues to uncover signs of improvement.

At a many new European Central Bank assembly dual weeks ago, ECB President Mario Draghi did his best to reduce this regard by observant that a bank hasn’t even discussed a awaiting of exit strategies yet. But even with this sincere dovishiness, a Euro remained comparatively strong. That ECB assembly merely elicited a exam of support during 1.0850; and 3 weeks later, that turn is still display as intermediate-term support. On a draft below, we’re looking during a trend in EUR/USD that’s shown around 2017; and notice how cost movement is now staying nearby a mid-line of a channel.

EUR/USD, GBP/USD during Support While USD/JPY Pulls Back

Chart prepared by James Stanley

On a draft below, we’re removing a bit some-more granular with new EUR/USD price action on a hourly chart. Notice how a discerning exam next 1.0850 progressing a week was fast bought, and a bit reduce on a draft during 1.0819 we have a pivotal Fibonacci turn that could be looked during as delegate support.

EUR/USD, GBP/USD during Support While USD/JPY Pulls Back

Chart prepared by James Stanley

Is Cable (GBP/USD) Close to ‘Turning Over’?

This motorist goes behind roughly a month, though a warn proclamation by Theresa May of early ubiquitous elections in a U.K. elicited a topside dermatitis in GBP that, as of yet, has not retraced. In a weeks after that announcement, support continued to uncover above before operation resistance, though after yesterday’s Bank of England ‘Super Thursday’, prices have continued to exam intermediate-term support zones.

The large doubt here is either a downtrend in GBP has some-more room to run. After shrinking in a operation nearby support for over 6 months after a ‘flash crash’ in a currency, this new topside cocktail could have only gotten bears a bit some-more room to work with short-side setups. Conversely, if markets do expect a ‘less dovish’ cost from a Bank of England in a entrance months, that would expected need to be driven by British acceleration numbers, this intermediate-term support can reason as bulls hoard control of GBP cost action.

EUR/USD, GBP/USD during Support While USD/JPY Pulls Back

Chart prepared by James Stanley

Will a Yen Find Resistance to Continue Running Lower?

One of a some-more conspicuous trends after a U.S. Presidential choosing in Nov was a re-emergence of surpassing Yen weakness. This is really most shaped on a Central Bank model of markets awaiting a BoJ to be one of a ‘more dovish’ vital CB’s; and given a decades’ prolonged tale that a republic of Japan has had with deflation, it creates clarity to demeanour during a BoJ as one of a ‘more loose’ Central Banks.

But after that assertive pierce in a 6 weeks after a election, USD/JPY spent most of a initial 4 months of this year congesting-lower. Around mid-April, Yen debility began to uncover again, and sellers continued to sell a banking as a up-trend in USD/JPY began to re-appear. On a draft below, we’re looking during a longhorn dwindle that had shaped after a post-Election run, adding in a new topside breakout.

EUR/USD, GBP/USD during Support While USD/JPY Pulls Back

Chart prepared by James Stanley

On a hourly draft below, we’re looking during intensity support levels in USD/JPY in a bid of bullish continuation.

EUR/USD, GBP/USD during Support While USD/JPY Pulls Back

Chart prepared by James Stanley

— Written by James Stanley, Strategist for DailyFX.com

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